The Australian share market has certainly been running hot over the past few months, so where do you start looking for value?
Recently, I had a look at Wilson Advisory's Invest Now market snapshot, which picked out five of its highest conviction stock picks for investors. You can check that out here.
The Wilsons team said there were some warning signs in the market, such as domestic inflation showing signs of picking up speed and potentially tempering the outlook for further interest rate cuts.
But there are always pockets of value among stock exchange-listed companies, and along with their picks among the big end of town, the Wilsons team have also named four stocks which are worth a look in the small to mid-cap size range.
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Investing ideas
So without further ado, these are the companies they're keen on.
Firstly, they have their eye on construction materials, equipment, and service provider Maas Group Holdings Ltd (ASX: MGH), which in August reported full-year revenue of $997.4 million, up 13%, and a net profit of $78.5 million, down 7%.
The Wilsons team is keen on Maas for its exposure to the building sector generally, as they explain:
This core business segment is led by a collection of quarries along the east coast and complemented by downstream capability in concrete and asphalt. Market conditions are attractive, including growing demand through infrastructure spend and residential housing activity, constrained supply on new quarry permitting and rational competitive behaviour.
They also suggest that growth through acquisition might be part of the Maas game plan.
They are also keen on prestige and luxury auto retailer Autosports Group Ltd (ASX: ASG), for "three broad reasons".
Firstly, the industry sector appears to be improving generally, and secondly, there is the potential for further industry consolidation.
Lastly, while the stock has re-rated, its valuation remains attractive, trading at a price to earnings discount to both automotive peers and other interest rate-sensitive consumer names.
Animal nutrition company Ridley Corporation Ltd (ASX: RIC) gets a tick as well, despite its shares trading close to their highs over the past 12 months.
We are attracted to Ridley's effective strategy of reinvesting in asset capacity to support volume growth in the bulk stockfeed business and the premiumisation journey for the packaged and ingredients segment. The recent acquisition of IPF Distribution offers opportunity for significant earnings improvement through cost reductions and network rationalisation, both of which management have successfully executed on within the existing Ridley business units.
And lastly, the Wilsons team also likes the look of Nanosonics Ltd (ASX: NAN), which sells systems for sterilising medical devices and which has had recent wins in the US market.
On the speculative side of things, the Wilsons team suggests Clarity Pharmaceuticals Ltd (ASX: CU6) could be worth a look, but warns that it falls into the high-risk category for investors.
Clarity Pharmaceuticals is a developer of radiopharmaceutical products for the diagnosis, clinical assessment and treatment of cancer. Clarity has staked out a proprietary position around the use of 'theranostic' isotopes of copper. Combined with Clarity's proprietary 'SAR' chemistry platform, these isotopes offer longer half-lives and superior product characteristics compared to conventional isotopes used in radiopharma.
Happy investing!
