Recently, analysts from broker Bell Potter compiled a quarterly review and outlook for global and local markets. Here are 10 stocks on the S&P/ASX 200 (INDEXASX: XJO) that analysts favour for 2020.
CSL Limited (ASX: CSL)
After surging more than 51% in 2019, CSL has been earmarked to outperform again in 2019. CSL’s core business involves ‘fractionation’ of human plasma, which is then used to treat a wide range of diseases and medical conditions. The company also boasts an impressive research and development department that provides additional therapies.
According to analysts, the global growth in plasma volumes is expected to be 8% per annum for the foreseeable future. In addition, the company has a portfolio of products in late-stage development that are close to being launched.
Woolworths Group Limited (ASX: WOW)
Woolworths accounts for 37% of the food and liquor retailing in Australia. The company also operates in discount department stores and hotels. Analysts are bullish on Woolworths in 2020, citing the companies plans to demerge or sell/IPO their portfolio of alcoholic drinks and hotel business.
Netwealth Group Ltd (ASX: NWL)
Netwealth Group is a specialist investment platform used by financial intermediaries to provide investment management solutions. The company’s platform provides financial advice on superannuation and other investments.
Following the Royal Commission into banking and financial services, Netwealth has been taking market share from institutional platforms such as the big banks and other large finance companies. Analysts favour Netwealth in 2020 as they forecast a structural shift in the wealth management companies.
Aristocrat Leisure Limited (ASX: ALL)
Aristocrat Leisure is a gaming technology company that develops, manufactures and sells content, platforms and systems. The company has a strong recurring revenue stream, with 27.5% of group revenue coming from placing and leasing gaming machines in customer venues.
Analysts like Aristocrat for the company’s strong position in the US gaming industry, which should support growth in the medium term. In addition, digital gaming also shows great potential for Aristocrat, with the segment forecast to grow at around 13% per annum for the next 3 years.
Worley Ltd (ASX: WOR)
Worley (formerly WorleyParsons Limited) is a professional services company that provides expertise for engineering, project management and maintenance of oil and gas, mining and chemicals sectors.
Analysts are optimistic in Worley’s medium-term earnings, with the company set to benefit from improving activity levels in each sector. In addition, the company’s acquisition of Jacobs Energy earlier this year is forecasted to generate synergies worth $130 to $160 million over the next 2 years.
Goodman Group (ASX: GMG)
Goodman Group is the largest industrial property business listed on the ASX, with operations in Australia, New Zealand, Asia, Europe, Brazil and North America. Goodman’s FY19 report revealed operating profit to be 11.4% higher than the year prior, with total assets under management growing 21% for the year.
Analysts have a favourable long-term outlook for Goodman’s, with industrial properties expected to benefit from the growing e-commerce sector and the expanding middle class in developing countries.
Downer EDI Limited (ASX: DOW)
Downer EDI designs, builds and maintains a wide range of assets, with urban services accounting for more than 80% of operations. According to analysts, Downer is well poised to benefit from more government spending on infrastructure.
Amcor Ltd (ASX: AMC)
Following its acquisition of Bemis Company, Amcor is the global leader in consumer packaging. Analysts are attracted to the company’s combination of defensive earnings in developed countries and exposure to growth in emerging markets.
Sonic Healthcare Limited (ASX: SHL)
With the radiology and pathology sector set to benefit from increased government spending and higher patient rebates, analysts like Sonic Healthcare. The company also has defensive earnings and is well poised for further international expansion and acquisitions.
Macquarie Group Ltd (ASX: MQG)
Macquarie is a global provider of banking, financial, advisory, investment and fund management services. Analysts like Macquarie for the group’s ability to adapt to changing financial conditions by switching from a traditional annuity-style to more market momentum, which they think will allow the company to maximise returns.
Should you buy?
Bells usually produce really quality analysis and findings, but in my opinion, just because an analyst slaps a buy recommendation on a stock doesn’t mean investors should rush out to buy shares in the companies listed.
As always, a prudent strategy would be to keep these companies on a watchlist, do your own research and let price action confirm before making an investment decision.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Amcor Limited and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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