Brokers across the Tasman have been hard at work picking their top share ideas for 2021.
In a recent article, The New Zealand Herald surveyed six of the country’s top share brokers and asked them for their 5 top New Zealand share picks for 2021.
New Zealand’s benchmark NZX 50 Index (NZE: NZ50G) had a blinder of a year in 2020, returning 14% to 31 December, compared to precisely 0.1% for the S&P/ASX 200 Index (ASX: XJO). It’s a bit unfair to compare the two indexes given they have very different industry compositions, but clearly something good has been happening in NZ that is worth paying attention to. Fortunately, many of the biggest NZ companies are also listed on the ASX.
The survey asked brokers to choose the securities they think will provide best short-term performance over the next 12 months. This means a company’s long-term potential is not necessarily considered. The brokers also do not get to review or change their picks throughout the year.
With that said, here are 3 companies the NZ brokers picked will do well in 2021 that also happen to be listed on the ASX.
EBOS Group Ltd (ASX: EBO)
EBOS Group is Australasia’s largest diversified healthcare and veterinary products distributor. The company generates more than $8 billion of revenue per year and grew revenue by 26.5% in the 2020 financial year.
EBOS was picked by no less than four of the six brokers surveyed. The company was picked for its solid growth outlook and robust demand for healthcare products as well as its increasing free cash flow and strong balance sheet. Brokers also noted that the company has a ‘defensive growth profile’, which means the share price may hold up better than other companies in 2021 if volatility strikes.
Spark New Zealand Ltd (ASX: SPK)
New Zealand telecoms company Spark was also picked by four of the six brokers as a likely winner for 2021. Interestingly, most of the reasons given relate the increasing investor demand for companies like Spark, which has a strong dividend and infrastructure-like defensiveness to earnings. In 2020, Spark’s revenue grew 2.5% and net earnings increased by 4.4%.
A2 Milk Company Ltd (ASX: A2M)
Despite a shocking year in 2020, a2 Milk was picked by two of the six brokers. The brokers backing a2 Milk suggest that 2020 could be a speed bump in the company’s long-term growth story. In 2021 they expect a2 Milk to continue to diversify its distribution channels away from reliance on the daigou channel (where shoppers buy products on behalf of others and send them back to China).
Other top ASX share picks for 2021
The Fisher & Paykel Healthcare share price had a huge year in 2020, rocketing 50% with full year revenue growing 18%. Meanwhile the brokers highlighted that the Serko share price may stand to benefit from a recovery in travel demand as vaccines for the COVID-19 virus become more widespread.