Need to Know | 22 stocks for 2022!

Candice: [00:00:03] Hello, 2022. Welcome to talk money to me, your need to know financial podcast. Happy New Year, everyone. We hope you enjoy the holiday season and were able to sit back and relax. So this is our first recording back from our break. So again, welcome everyone back to talk money to me. I'm Candice Bourke.  Felicity: [00:00:21] And I'm Felicity Thomas. Now, our chat today is not personal advice and even though we're registered financial advisers at Shaw and Partners. Please note that this podcast and the content discussed does not constitute as financial advice, nor is it a financial product. Candice: [00:00:34] The content on the show is general in nature, and you should seek professional, appropriate advice before making your financial decisions. Now here at Talk money to me were all about talking and making money, investable ideas, ways to better manage your wealth, and the tools to help educate you on your financial landscape. Felicity: [00:00:52] That's right. So on our show, you can expect to hear lots of great ideas, pre-IPO listing opportunities, already listed businesses exploding with growth, as well as awesome insights from experts and special guests. You know, we've been busy now break lining up some stellar interviews for you. As you know, just around the corner is reporting season and we've reached out to a few ASX Top 200 companies to sit down with their CEOs and go over the latest financial figures and growth outlook for the business. Candice: [00:01:19] On top of that we'll also be exploring once again, you know, conversations like the property market, ways to get into the hot, hot, hot housing market, as well as also discussing other financial strategies such as, you know, benefits like the investment bonds, ideas like debt recycling. Maybe you've heard of that. We're going to go into it contributing into your super fund and why that's important. Thanks to everyone who has been listening in and tuning in to our socials, and you recently reached out with a couple of your questions and also shared some interesting stocks that you're currently holding in your investment portfolio. Felicity: [00:01:51] Yeah, I mean, we're really trying to ramp up our socials, if you haven't noticed. And we also wanted to kind of change up this need to know episode instead of delving into a strategy. And we want to answer all your questions as well as kind of share something interesting to us at the moment and something a bit more current. So let's deep dive straight into the listener questions and remember, you can always send us questions via email at TMTM@Equity Mates.com Or through Instagram. Now, Handle is @TalkMoneytomepodcast. So the first question is Westpac a good buy now at its current prices? So Candice we'll let you take this one. Candice: [00:02:29] So, all right, of the big four banks, the Australian Big Four banks I'm talking about, obviously the preference out there, it varies from different house to house. But what we're saying at the moment is ANZ, Westpac, NAB and then CBA, and there's a few reasons for that order. Firstly, if we look at ANZ and Westpac, you know, on a PE multiples their price to earnings, they're probably looking the most attractive for the price you pay out of the bunch. And at the moment, you know, at the time of this recording, ANZ has a P/E of 13 times, with Westpac being 14 times. And by the way, today we're recording on Tuesday the 18th of Jan 2022 versus NAB, on the other hand, sitting more around 15 and a half times. And CBA being quote unquote the most expensive on a p e multiple 20 times. So if you also think about the share price, you know to answer the Westpac question, is it a goodbye? Well, Westpac's definitely been the most volatile of the big four banks in the past year, and that's mainly due to the intense, you know, competitive pressures that the business felt in the latter half of 2021, which ultimately led to margin pressures being impacted. And they've also had to fork out a lot of customer refunds and litigation costs. So that's a positive for a bank, and it's getting a lot of bad press and headlines as well. And I think the bank hasn't fully recovered, in my opinion, from the corporate regulator which launched its attack. You know, there was a couple of court cases against Westpac for their widespread compliance issues and their failures in the anti-money laundering space. So, you know, lastly, remember that AUSTRAC and Westpac, they settled this dispute where Westpac had to agree to pay back a whopping $1.3 billion as a penalty fine. So that's a big number. It's a big chunk in their balance sheet, you know. Fortunately, they are a large enough bank to handle this, but obviously the markets responded negatively to the news. So, you know, I'm going to answer the question without really answering the question, so to speak. Classic broker way to answer this question. But if we look at the street, the price target is $24 94 to reach, which is roughly a 16 per cent upside. So you could say that brokers are optimistic out there and positive on Westpac to eventually get back on track. And someone also asked, You know, how many ETFs and individual companies is too many? Like what's a good make up? What do you think on that Felicity, your thoughts? Felicity: [00:04:46] That's an interesting question, and I guess one that we kind of get all of the time. You know, for me, it really depends on the size of your investment portfolio. You know, I prefer to have no more than 20 to 30 highly Concentrated positions, you know, our investment philosophy is to have a high conviction portfolio of stocks, ETFs or managed funds that you are planning on holding for a very long time rather than buying and selling constantly. I recently read a book, you know, the little book of behavioural finance. And essentially what it says. And this is something that you need to need to listen to the best portfolios, the ones that literally people set and forget and they do not play around with. So, you know, I believe, you know, stick to what you know, you know what you're interested in as well. For example, if you want to focus more on domestic shares, then perhaps you can pick direct stocks in the Australian market, for example. And then, you know, you don't know too much about international equities. Then you pick an international ETF, then you're actually able to diversify into other markets. Spread your risk and you know you're focussing on the market that you actually, you know, I guess, have your finger on the pulse. Yeah, a good way to actually do this and I guess to kind of paint a picture is to look at a core satellite approach. So your core might be your direct Australian equities that you know very well, and the satellite could be the ETFs. Or you could do it the other way around where you have your core ETFs and your satellite individual stock picks. I think that's probably a little bit more common. What do you think, Candice? Candice: [00:06:24] Yeah, I agree with that. And I think it kind of leads into the next question we had, which we won't jump the gun yet. But you can also have your satellite ideas as thematics, right? So you can pick a theme, whether it's medicinal marijuana, A.I., robotics, you know, futuristic technology, whatever that they might be, that you think it's a really great high conviction idea, but I don't want to be my entire portfolio then chuck it in your satellite exposure. So good Segway here. This sort of led to another great thematic that we talk about a lot with our clients, and one of our listeners asks us directly, you know, our thoughts on the cloud computing investment space as a thematic so Felicity, what's your thoughts? Felicity: [00:07:04] I'm really happy that this question was asked because as you know, I love thematic investing. And look, cloud computing is a mega trend, you know, and it has been for a while, and we know it's one being one of the strongest growing segments of the technology sector. And given a lot of the world's data, software applications are still maintained outside the cloud. Strong growth is forecasted if you look at the global cloud computing market size, it's expected to grow from 445 point three billion in 2021 to US 947 point three billion by 2026, which is growing at a Kaga of sixteen point three per cent, you know, during that forecasted period. Think of names like Dropbox, Salesforce, Workday. A good way to get this kind of exposure as well without picking the eyes out of different stocks would again be an ETF. And I know that BetaShares actually has a pure play cloud computing ETF. The ticker is CLDD on the ASX, which you know, I think will give you some good exposure. Anything else to add Candice? Candice: [00:08:08] I think that's a great rundown. And you know, we're a massive fan of cloud as an ETF, so definitely looked at up look up their fact sheet. And another way to think of it is cloud computing is literally changing the way businesses interact with their customers, and it's therefore forcing businesses to shift their entire IT infrastructure and system onto the cloud. So if you're not on the cloud, you're likely going to get left behind because cloud computing is so important to, you know, some really big emerging themes like autonomous vehicles, AI, augmented reality, robotics, 5G, telecommunications, blockchain, the list goes on. So as an investable idea and a theme, I think it's a bit of a no brainer for the revolution of tech that we're already living in. Also, our mates Alec and Bryce over at Equity Mates did an episode on this very topic, so head over to their podcast channel on whatever device you use and search for their episode. Deep Dive Cloud 1+1. Felicity: [00:09:06] Yeah, so Natalie Pugh, so I hope I pronounced your last name, right? Kindly pointed this out to us because she is the expert on that episode, which is pretty exciting. Now this next question is a great technical one, so implications for buying US stocks and overseas tax returns potentially needing to be lodged? Candice: [00:09:25] Yeah, this is a great question. Honestly, you know, tax keeps people up at night, so it's it's a really decent question. Felicity: [00:09:31] Oh, that's it. The only thing certain in life. So when you start buying or selling shares in the US, your account should be set up with a W8 bent form. If you're buying your personal name or if you own a company or trust, it will be a wait been a form. Now this ensures there's no withholding tax applied as we actually have a tax treaty with the US. If you're an Australian resident for tax purposes and not a US citizen, you generally only need to legitimate. Tax return here, however, we're not accountants and we don't know your personal circumstances, so it's worthwhile checking with your tax accountant. I think one thing that I wanted to add here is you should actually consider the effects right at the time. Currently, if you were to FedEx, your instantly probably losing about 30 percent. So only look at US stocks if you're planning on holding long term. And companies that have growth to support the initial haircut. You can also look at managed funds that are hedged. However, if you look at unhedged, the effects usually does come out in the wash over the long term. Hope that answered your question, but yes, stick to an accountant who knows your personal circumstances. Now, someone also commented that he actually said that he's worried about overexposure to potentially certain industries. So the question that was asked Do you need to diversify your stocks across multiple markets, sectors, countries and companies? So what do you think? Candice: [00:10:57] Candice 100 percent, a thousand percent a bazillion percent? Yes, definitely. This is one of those no brainers to us, you know? Listen, I can't stress enough and we talk about all the time with our clients and anyone that will really listen really to us is don't put your eggs in one basket. You know, diversification is key because it helps achieve your long term goals and objectives. It's going to help reduce the impact of the market volatility for you. It also helps reduce the time you spend potentially worrying about your investments, like the comment. You know, am I too exposed to the one sector? Well, if you're diversified, you're getting rid of that worry, right? And you can do things like we talked about earlier, so you can get yourself set into diversified ETFs across multiple market sectors in multiple areas. Because as we know, markets are pretty predictable nine times out of 10 when some areas the markets are down, a.k.a. commodities. Other parts of the markets will be up. For example, health care or technology, or vice versa. So you're spreading your eggs. You're spreading your risk across multiple baskets to ultimately help promote the magic power of compounding interest, which is going to just grow and preserve your capital over time. Felicity: [00:12:10] I think there's also probably one other thing we want to add here. You don't want to over diversify either. There's no point having a portfolio of 100 different names with, you know, $500 in each name, so you can have over diversification. So I think it's about finding that really right balance. And like Candice said, you have an ETF, you're only buying the one position, but you get a basket of shares. So if you're worried about diversification, that's probably the right way to go. You know, unless you have higher, high conviction in these singular ideas. Candice: [00:12:41] So staying on the ETF questions, we were also asked about investing in particular to the ethical ESG clean energy space. In particular, one of our audience members asked, Are there any clean energy ETFs that we like and invest in? Felicity: [00:12:55] Yeah. So definitely there are few that we know of and that a couple of are listed on the ASX. So I think I'll go through the pure play. So VanEck Global Clean Energy ETF, the code is C L N E on the ASX. Now this is a pure play energy. It holds 30 of the largest and most liquid companies involved in clean energy production and associated technology and equipment. Globally, it's relatively new ETF. It actually only started trading March 2021, so that's pretty exciting. You know, you could see this as an opportunity. So far it's in the red. It's down about 13 and a half per cent since inception, which, you know, to us, it's an opportunity, right? It's misunderstood by the market currently. Clean energy is a long term growth opportunity, so you're really investing in the global energy supply of the future, which, as you know, is transitioning away from finite non-renewable sources. It holds names that you probably wouldn't have heard of. Plug Power, Simonds DMCA Renewable Energy, Brookfield Renewable Corp. I don't believe there's a names that are widely known now. Although this other ETF is in a pure play energy ETF, it's one to mention in the fight against climate change and also kind of has one of those factors. So you've got BetaShares Climate Change Innovations ETF. The code is ERTH again on the ASX. Now this ETF provides exposure to a broad range of solutions, including clean energy, your electric vehicles, energy efficiency technology, sustainable food, water efficiency and pollution control. Now, this ETF has a bigger basket with up to 100 leading global companies that derive at least 50 per cent of their revenues from products and services that help to address climate change again. Relatively new inception date was also March 2021. That must have been the time that all the ETF providers were like, Let's get green Candice: [00:14:49] coming to market. Felicity: [00:14:50] That scene has actually returned positive a return of nine point four percent since inception, but I believe it's because it's got names like Tesla. Hello, know, Ecolab, NEO. So it's got more of the technology play, which we know is done very well. So hope that's a long winded way to answer that question. Now, if you're looking for a broker, we had this question, which is something that we do get asked all the time and who is the cheapest online broker?  Candice: [00:15:19] Well there's a lot of cheap online brokers. You know, gone are the days where we used to pay or in fact, like our parents and our grandparents generations used to pay five per cent brokerage fees. There's a whole bunch you can go looking for. I'm not going to name them all because of me for days and days and days. However, here's a good tip. Go on to finder.com.au And it brings up a whole bunch of great options. You know, currently the list has got Etoro, IG Share Trading, Think Market's, Super Hero, Go Markets and Selfwealth. Or, you know, if you want to also reach out to us, we'd be happy to have conversation with you too. But remember, cheap isn't always the best. It's just like buying stocks if it's falling off a cliff. I have a look at it. Think about the reasons why. Sometimes it actually is beneficial for you to pay a little bit more to get advice that's really personalised your situation. Felicity: [00:16:13] I mean, look at Tesla, for example, or CSL have never really been cheap, but great companies, correct? All right. Well, that was fun. What a way to start off the new year. We hope you like that and we'll continue, hopefully to do this if you're enjoying it and you also get to have all of your questions answered. So to kick start off the year, we want to mention 22 international stocks for 2022 that we actually believe have good growth prospects. All right. So here's 22 international stocks for 2022 that we believe have good growth prospects. I'll start us off. The first one is ALK Alaska Airlines, right? Who is going the airlines? However, it's actually the fifth largest carrier in the US and has weathered Covid better than the larger U.S. carriers as they have returned to profitability. So the price target of this idea is $80, so it's got around 55 per cent upside from current levels. Candice: [00:17:18] And true story. Alaskan Airlines, I think, is a unique business because a lot of other major airlines don't actually want to land when it's quite wintery, whether they just go nut, don't want to do it. So these guys actually take, you know, a little bit more cautious risk. Yeah, let's call it cautious risk and will land these smaller planes. So they are the ones that have the least amount of impacts when it comes to the North American weather. Fun fact there for you. All right. Number two is another no brainer. Google (Alphabet). Everyone should know these companies. So we're going to skip over the details and what they do and the price target is, can you believe it? Three thousand nine hundred twenty five dollars per share. U.S. we're talking, which is around 32 percent upside. So a tech play that Felicity: [00:18:02] one and then we've got AMP. Now it's not our Australian AMP capital, it's actually Ameriprise Financial, which is an asset manager in the US. So obviously the financial sector price target is $355, so approximately 19 percent upside from current Candice: [00:18:17] levels and the number forward jumping into the semiconductor tech space. So the business is analogue devices, which the code is ADYE price target of $220 or approximately 20 per cent upside for that one, right? Felicity: [00:18:30] And then we have the code is at the end and it's our business and this is a health care pharmaceuticals play. You know, we're thinking 2022 could be the year of the biotech, the maddick, which is, I guess, this company is in clinical stage, developing novel therapeutics to actually treat diseases using their proprietary protec platform, which essentially is a protein degrader. Now this could be the top pick of them all with a price target of $151. So it's got approximately upside of 125 percent, Candice: [00:19:01] definitely one to watch, and then number six is BAC. Bank of America self-explanatory what this business does and what it's involved in. So why Bank of America? Well, consensus estimates have U.S. GDP growth at four per cent in 2022 and 2.5 percent in 2023. So essentially, banks are typically GDP growth industry players. And unlike the last recovery that we saw, a.k.a. the GFC, you know, we're expecting back to even produce, you know, more solid results and participate in the growing economy with no distractions. Fingers crossed. Hopefully this time so price target $64 US per share, which is 44 per cent upside on current levels, Felicity: [00:19:40] then we have Berry global manufacturers and suppliers. So again, probably something you've not heard of. The code is B e r y. This is in consumer packaging goods in health hygiene, as well as the pharmaceutical space in North America. Now we believe the benefits of plastic packaging so lightweight, durable support, continued growth over time, and Berry's efforts to secure recycled circular feedstock is actually transitioning to a source of potential growth. So price tag of this $185, so that's 18 per cent upside. Candice: [00:20:12] And number eight, coming in the race is square, also known as Block, and it's a payments business. So if you've been purchasing goods of late going out there shopping and you see literally a little white square device that you tap and go, well, that is Square, and that's what they are in the business for. And we think that the transformational Afterpay acquisition will actually deepen the connection between the seller and the Cash App ecosystem. So it's going to further enhance Block's positioning as a two sided merchant and consumer payments network. So very large moat this one, and we estimate that Afterpay acquisition could actually accelerate the overall business by 18 per cent gross profit margin in 2022 and 20 per cent in 2023, which is inclusive of 400 million of all of the revenue synergies all tied up together. So price target on this one, three hundred and twenty two dollars per share, so a whopping 78 per cent upside, definitely one to watch. Felicity: [00:21:06] Then we have CHK, which is Chesapeake Energy in its oil and gas company with mines in the US. I'm not going to go into too much detail or price tag of $100, so that's 57 per cent upside. Candice: [00:21:18] The number 10 is a clean energy place, clearway energy, CWN and is the code for that one, which is in the wind solar storage space. Obviously, playing on the attractive low beta exposure to the ongoing US decarbonisation trend. Price target there. $39 with 11 per cent upside. Felicity: [00:21:36] Then we have KO, which is Coca-Cola, which is a stable earnings growth, and it's attractive to help ride out defensive times. You know, the company is effectively navigating inflationary headwinds while in. Lamenting transformational portfolio and organisational changes that will help enable it to emerge stronger following the pandemic. So Coca-Cola has been around for a long time. I mean, I love and Ice Coke Zero Diet Coke, so I think going to be around for the next 10 20 years. Price target 62, Dollars said. That's 10 percent upside. Candice: [00:22:04] So does Charlie Munger still evidently say the next one is Dexcom DXCM, which is a medical device companies another health care one which we think is just going to accelerate in the medtech environment. You know, everything that's been sheltered and kept in the bubble from Covid is going to go gangbusters, in our opinion. So $660 is the price target, and that's a 17 percent upside for that one. Felicity: [00:22:29] All right. So then we've got 13, which is General Electric, the Code is GE. You know what's really interesting? They've actually announced split into three publicly listed entities, which are all investment grade. So, you know, potentially further M&A here. Price tag at $143. That's 47 percent upside. Candice: [00:22:48] The next one we have is IQ via Holdings, which is an advanced analytics tech based company really in the medical health care space. And it's another pharma theme here. So price target for this one $310, 15 percent upside. Felicity: [00:23:02] Then we have number 15, which is Microsoft needs no explanation here. The code is MSFT price target is $360, so that's about five percent upside. But we note the consensus actually places 20 percent upside. So to reach $372 Candice: [00:23:19] number 16 is on holding, which is a sports apparel company and that has a price target of $55 per share, and that's actually 96 percent upside from current levels. Felicity: [00:23:29] Then we have quanta services, so the code is P, W R. It's an electric power and the evolution of EV adoption and renewable energy space. So price tag target $139, that's 22 percent upside. Candice: [00:23:44] No. 18 is SBA Communications, which is a specialised telecommunications rate base in the US. SBC is the ticker for that one price target 400, so about 11 per cent upside. Felicity: [00:23:57] And we have Signature Bank, which is quite a cool name, so the code is SB. NY Diversified Financial in regional bank upside is 23 per cent, with a price target of $375. Candice: [00:24:09] Coming in at number 20 is T-Mobile. You've probably heard of this. It's another U.S. telecommunications provider, and it's basically leading the charge for 5G in the US. So price target on this one hundred and seventy with about 48 per cent upside on current levels, Felicity: [00:24:23] the number 21 is Ulta Beauty, which is a specialised beauty retailer. And this actually makes Candice this top pick because we agreed on everything else. the price target is $475. So about eighteen per cent upside. Candice: [00:24:37] And finally, lucky last but not necessarily last in the race is number 22 W.R. Berkley, which is in the business of insurances. So another diversified financial play for this one 20 percent upside, we think, to reach a share price target of $97. So that's the top 22 global stock ideas, mainly all in the U.S. for Matic investing ideas there, which we think should play out this year. So what's interesting are these 22 global stock picks, nearly 20 per cent of them fall within the tech and semiconductor space. So emerging theme there and then also a stronger theme emerge is the diversified financials and then also health care. So I think those three themes take diversified financials and health care. You know, are going to really stand out in 2022. Felicity: [00:25:27] All right. Yeah, that's pretty exciting. And look, Candice and I decided to pick our top six of these for 2022. Now we agreed on all of them besides number six, and we'll go into more detail with these in our next order pad episode. Candice vs Felicity. Candice: [00:25:45] So stay tuned for that battle. Felicity: [00:25:47] That's it. And look Candice has gone with Ulta Beauty. I've gone with ON holdings, AG. We're going to share a little bit of information about these companies and our social, so we'd love if you could send us questions about both Ulta Beauty and on holdings that we'll addressed in our order pad episode. Candice: [00:26:05] Now, before we sign off, please remember, although for senior financial advisors at Shawaryn Partners, please note our discussion today and all the investments we talked about does not constitute as personal financial advice. As always, you should seek personal financial advice before making any of your investment decisions, but we do want to hear from you. So like Leslie said, drop us an email or slide into our DMs. Let us know what you think about the stocks we've talked about already, or if you've got any other cool investable ideas or ETFs that we can chat about. Felicity: [00:26:35] Let us know and feel free to reach out to us on our social media channels, which will be in the show notes below. Again, follow us on Instagram at Talk Money to Me podcast for Daily Market Updates. Also now on Reddit and Tik-tok, as well as LinkedIn, so we'll put those details in the show notes below. Until next time,