Although it's faring better than the US markets, the ASX is nevertheless very volatile at the moment.
The uncertainty about the COVID-19 Omicron variant seems to be making investors jittery. Will it be resistant to vaccines? Will it cause more lockdowns?
"Markets will remain watchful of Omicron developments, with a seemingly inevitable further surge in global reported cases likely," said BetaShares chief economist David Bassanese.
"Another uncomfortably high US consumer price index report on Friday will be the other big market focus this week."
Nervous times call for a stiff drink and maybe a flutter.
If you want to literally back those habits, Morgans has helpfully picked out 3 drinking and gambling ASX shares among its "best ideas" for December.
"Our best ideas are those that we think offer the highest risk-adjusted returns over a 12-month timeframe supported by a higher-than-average level of confidence," said analyst Andrew Tang.
Image source: Getty Images
A demerger that will provide value
Tabcorp Holdings Limited (ASX: TAH) shares have done well this year, climbing 27% while giving out a 2.86% dividend yield.
Tang reckons there is more to come in the coming year as it separates out the Lotteries and Keno business.
"At current levels, we think Lotteries and Keno is trading on ~15x EBITDA and think this multiple can re-rate to between 16x and 20x on a standalone basis over time, supported by offshore peer comps and domestic infrastructure names."
Drinking shifts from home to pubs
Supermarket giant Woolworths Group Ltd (ASX: WOW) spun off its alcohol retailers as its own company Endeavour Group Ltd (ASX: EDV), which listed back in June.
Endeavour's operations include recognisable brands like Dan Murphy's and BWS.
The shares have dipped 5.45% in the past couple of weeks, which might present a buying opportunity.
The team at Morgans is confident further growth will come as Australia shifts to a post-pandemic mode.
"While Endeavour's retail division has benefited greatly from lockdowns and higher at-home consumption, its hotels business has been negatively impacted by closures and restrictions," said Tang.
"The reopening of venues in NSW and VIC should be positive for Endeavour overall, despite likely weakness in retail as at-home consumption normalises, given hotels is a higher margin business."
Recovery from China ban
Shares for winemaker Treasury Wine Estates Ltd (ASX: TWE) were devastated last year in the wake of the Chinese government slapping retaliatory tariffs on Australian imports.
Since then the company has worked hard to diversify its target markets.
"TWE has the China reallocation risk and it will take 2-3 years to recover these earnings in new markets," said Tang.
"However once it comps China earnings, we expect TWE to deliver strong earnings growth from the 2H22 [quarter] onwards."
Organic growth could be accompanied by acquisitions, according to Morgans.
"We view TWE's recent acquisition of Napa Valley luxury wine business, Frank Family Vineyards (FFV) as strategically important," said Tang.
"This high margin business should see TWE achieve its US margin target two years earlier than planned."
Treasury Wine shares are trading at $11.86 on Monday morning. They've gained 24.14% since the start of the year.
"The stock is currently trading at a material discount to its long term PE range," Tang said.
"We see recent share price weakness as a great buying opportunity in this high quality company."
