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Stocks Peter Switzer wants to buy or sell

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With reporting season upon us, is it time for ready, steady, BUY! Or should it be ready, steady, SELL! 

As we ponder questions such as: have we missed the Afterpay boat? And what will be the next Afterpay that has gone up around 650% since March 23? I want to see the reports and outlook statements of some of the companies that the analysts think have big to huge upside. 

Here’s my thinking. If you’re a huge punter/speculator, you’d buy these companies before they report and you’d resolve to hold them until they come good. And you hope the consensus of analysts on FNArena are not smoking something! 

I’ve gone looking for the top 100 companies on the ASX that have potential big gains if the experts know these businesses as they should. That said, the experts don’t know the future. They don’t know when a vaccine will show up or when we can travel around the country, let alone overseas. They don’t know how bad we’ll contract as an economy, how high the jobless rate will go and how badly company profits will be affected. 

It’s always a guessing game but the imponderables are usually easier than they are with the Coronavirus undermining companies and economies. 

And to be quite frank, even the CEOs of the companies I’m naming here are flying blind but we hope what is revealed in upcoming reports confirms that these companies have a future after we’ve beaten this damn virus. 

I’ve gone searching for quality companies that analysts believe have an upside waiting to happen. The question is: how long might that time be? I’ve divided the companies into two groups: 

1. Quality companies that WILL come good when the virus is beaten or contained. 

2. Good companies that SHOULD come good but there are questions about their survival if this COVID-19 challenge drags on. 

 

The first group of stocks and their forecasted gains are: 

 

The second group include: 

 

The first group is made up of stand-the-test of time businesses and provided you are a patient investor, I’d expect that these will reward those who have bought into these companies when the market (largely driven by shorter-term investors) has gone off chasing those companies that are likely to deliver over the next year rather than maybe in two or three years’ time. 

That’s the advantage a long-term investor has. And provided they invest with quality businesses that have long-run potential, then investing in companies one to 10 makes a lot of sense. 

Our banks, shopping centres and Sydney Airport could have problems for a year or so but eventually normalcy will return and these companies will again play a major role in our lives. Two weeks ago, the great investor Warren Buffett, of Berkshire-Hathaway, piled into Bank of America shares. That was a long-term bet that the biggest bank in the USA will eventually reassert itself as the dominant player in the world’s biggest economy. 

Our big four banks will follow a similar script when our economy eventually approaches normality. 

The second group of companies have huge potential but they come with risks. It might seem implausible but you have to ask the question: Can Webjet and Corporate Travel actually survive? 

These are the sorts of questions that the respective CEOs of vulnerable businesses will be asked. And if they convince the market, they might avoid another big sell off and there could be a buying opportunity for those who feel brave! 

For example, The Star (SGR) has a problem with Chinese tourists for at least one or maybe two years from now, but when this changes, its share price should reflect the return to normalcy and there could be a big rebound. That’s the gamble, so watch this space as we cover the reporting season. 

Peter Switzer is one of Australia’s leading business and financial commentators, launching his own business 20 years ago. This information was produced by Switzer Financial Group Pty Ltd (ABN 24 112 294 649), which is an Australian Financial Services Licensee (Licence No. 286 531). All prices and analysis at 3 August 2020. This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. This article does not reflect the views of WealthHub Securities Limited.