(Bloomberg) -- Cashing in on a collective dietary need for fatty acids and a firm that could be the first to hit a $2 trillion market valuation are just some of the top stock picks presented at the third annual Sohn Hearts & Minds Australia conference, according to the Australian Financial Review on Friday.
These are the six stocks highlighted so far at the conference, held for the first time in Melbourne. Of the picks presented today, 10 will be selected for a listed investment company.
Nufarm Ltd. (NUF AU)
The agricultural chemical manufacturer is great value at today’s prices, said Blake Henricks, deputy managing director at Firetrail Investments. That’s in part to it having a technology that “earns nothing but is worth $1 billion,” the Australian Financial Review reported.
The problem of over-fishing will work in Nufarm’s favor, as humans need a source of Omega 3 that could also be grown from plant-based canola, Henricks said, placing a value on the company of A$10.40.
Shares in Nufarm rose 1.3% to A$5.93 as of 1:20 p.m. Sydney time, after climbing as much as 5% in early trade.
Reece Ltd. (REH AU)
According to Emma Goodsell, portfolio manager at Airlie Funds Management, Reece’s July purchase of U.S. plumbing company Morsco Inc. was a logical move owing to the Australian firm’s owner-management structure.
“They have maintained fantastic returns by investing in the business,” Goodsell said, the AFR reported.
Store openings in the U.S. and increased margins could add as much as A$4 to its current share price, Goodsell said.
Reece shares rose as much as 2.6% on the recommendation, before erasing gains to trade little changed at A$10.72.
Amazon.com Inc. (AMZN US)
Amazon could be the first U.S. company to hit a $2 trillion valuation, said Nick Griffin, chief investment officer at Munro Partners, according to the AFR.
Amazon’s valuation has been relatively stable at about 20 times Ebitda, which is just a 40% premium to a standard consumer company, Griffin said. The company sits at the start of two “growth runways” he said, forecasting an enterprise value of $2.3 billion by 2025.
Amazon shares closed up 1.3% in New York, with U.S. based Piper Jaffray analyst Michael Olson saying overnight the company looked like a “champagne stock on a beer budget.”
Venustech Group (002439 CH)
Kok Hoi Wong, founder and CIO of APS Asset Management, picked cyber security firm Venustech, saying it is recession-proof and undervalued, according to the AFR.
Wong cites Chinese under-investment in cybersecurity behind his pick, stating: “China is building a new wall in cyberspace, a wall you can’t see and touch, but very possibly profit from.”
Shares in the information security products provider fell 1.4% in early Shenzhen trading, extending this year’s decline to 12%.
JB Hi-Fi Ltd. (JBH AU)
Tim Carleton, portfolio manager at Auscap Asset Management, takes a different view on the Australian retailer, among the most shorted stocks on the S&P ASX 200, and goes long with his recommendation, the AFR reported.
JB Hi-Fi is a “screaming bargain” that is well run and highly cash generative, Carleton told the conference.
Shares fell 1.1% in afternoon Sydney trading, taking this year’s loss to 5%.
Kar Auction (KAR US)
Steven Glass, a portfolio manager at Pengana Capital, picked Kar Auction Services, which provides wholesale vehicle auction services in North America, the AFR reported.
Glass cited “sustainable competitive advantages” from Kar’s scale of operations and market share for his pick.
Shares in the auction firm rose 1.3% in New York trading, and are up 14% this year.
- List of speakers at Sohn Melbourne: Soros Mentee Among Speakers at Sohn Conference in Melbourne
- Link to AFR report: Top investment tips from Sohn
--With assistance from Matthew Burgess.
To contact the reporter on this story: Rebecca Jones in Melbourne at revans6@bloomberg.net
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Peter Vercoe
©2018 Bloomberg L.P.
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