On The Bull this week, Damien Nguyen from Morgans lets us in on what he thinks of these 3 ASX 200 shares.
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Coles Group Ltd (ASX: COL)
The Coles share price is $22.50, up 1.3% today and up 4.5% over the past month.
Nguyen has a buy rating on this ASX 200 consumer staples share.
He explains:
Demand for consumer staples remains stable through economic cycles, and Coles benefits from pricing discipline across a duopolistic market structure.
Recent share price weakness, driven partly by broader cost-of-living and regulatory scrutiny concerns, has created a more attractive entry point for long term investors.
The company also offers a solid dividend yield and improving operational leverage.
BHP Group Ltd (ASX: BHP)
The BHP share price is $59.48, down 3% today and up 30% in the calendar year to date (YTD).
BHP shares rose to a new record of $65.04 last Wednesday before diving alongside other ASX 200 iron ore miners after a major production increase at Simandou.
The giant Simandou project in Africa contains the world's largest undeveloped iron ore deposit.
The mine began producing in November. Its output is expected to significantly impact supply/demand, and thus, the iron ore price.
The iron ore price has fallen 9.3% over the past month to US$101.50 per tonne on Tuesday.
Nguyen has a hold rating on the ASX 200's largest mining share.
He comments:
The global miner offers broad diversification across iron ore, copper and potash, underpinned by a fortress balance sheet and a disciplined approach to capital returns.
Copper provides meaningful long term exposure to the global electrification and energy transition theme, while iron ore remains the dominant near term earnings driver.
However, the macro backdrop remains uncertain, with Chinese steel demand facing structural headwinds and global growth indicators sending mixed signals.
The valuation at current levels appears broadly fair, with commodity price assumptions already reflecting a reasonable medium term outlook.
BHP remains a core holding for resource oriented portfolios, but with limited near term re-rating catalysts, we retain a hold recommendation.
Commonwealth Bank of Australia (ASX: CBA)
CBA shares are $159.68, down 0.7% today and down 8% over the past month.
Nguyen has a sell rating on the ASX 200's biggest bank share.
The analyst said:
CBA is Australia's highest quality retail bank, with a leading market position, strong digital platform and reliable earnings generation.
However, quality alone doesn't justify the recent valuation, which stands at a significant premium to domestic and global banking peers.
Credit quality remains sound, but should be monitored in a higher-for-longer interest rate environment.
The market has long rewarded CBA with a premium multiple. But at recent levels, the shares appear to price in a near perfect outcome with little room for disappointment.
