The Australian stock market this year is looking much brighter than towards the end of last year. In our view, the Australian market over-reacted to a number of negative news articles and the rebound at the start of this year is investors becoming more rational and picking up stocks to buy now which were oversold on fear.
2019 is the year of opportunity. Even though growth around the world is slowing, monetary policy is starting to level off or ease again. This means that stocks will again be the asset to be in to take advantage of loose monetary policy. We have put together a list of some of the best stocks to buy now on the ASX for 2019.
The Three Main Market Drivers
Stock markets are generally driven by three factors within the markets, understanding these forces helps us time the market and buy or sell stock at the most opportune moments.
In general, the markets and stocks are firstly driven on a short-term basis via supply and demand imbalances. This is the order flow on a day to day basis as investors buy or sell stock for different reasons. This order flow is generally hard to forecast and requires strong technical analysis and understanding of the underlying market to properly time. To get the most out of the best stocks to buy now requires timing.
Secondly, markets and stocks are driven by macroeconomic forces in the medium-term. Factors include but are not limited to changes in interest rates, consumer sentiment, government policies and so forth. Understanding the nuances and how the different countries interact with each other in terms of trade and politics is key to understanding the forces that drive the markets as a whole.
Finally, stocks in the long-term are driven by fundamentals. Factors include but are not limited to quantitative factors such as earnings growth, profit margin and return on equity. Qualitative factors include factors such as competition, operating environment, political and policy environment.
To be able to pick the best shares to buy now, it is essential to combine market timing, macroeconomic and fundamental analytics.
Research Is Key To Finding The Best Shares To Buy Now
The hardest part about finding the best shares to buy is the ability to process a large amount of information and factors to be able to navigate the macroeconomic and fundamental environment. Our Research team has been hard at work uncovering the best shares to buy on the ASX from small to large cap, on a macroeconomic and fundamental basis.
I’ve outlined 5 stocks that we have found to either has growth potential or are undervalued and these represent some of the best value the ASX has to offer and what we consider are the best stocks to buy now.
Appen (ASX APX) – Appen is a global leader in developing high-quality, human-annotated datasets for machine learning and artificial intelligence. Appen has over 20 years’ experience and expertise in more than 180 languages with access to a crowd of over 1 million people.
Appen also partners with leading technology companies and government agencies to enhance their machine-learning-based products.
Over the last three years, Appen shares outperformed S&P/ASX 200 Information Technology Sector Index and S&P 500 Information Technology Index by over 750%. APX reported average revenue growth of 40% FY15-17, and revenue grew more than 100% in FY18. APX is a share to buy.
Pioneer Credit (ASX PNC) – Pioneer Credit Limited (ASX PNC) acquires and services unsecured retail debt portfolios that are more than 180 days overdue in terms of repayments and defaulted by those who have no default history before. PNC shares experienced four consecutive year’s growth in EPS and revenue since the company went public in 2014. There are no signs that this is slowing down, with FY18 half-yearly results showing an impressive +93% growth in NPAT and 57% growth in EPS.
Afterpay (APT) – Afterpay Touch Group Limited (ASX APT) is an emerging payment company with huge potential in Australia and a share to buy. The group has shown strong growth over the past year and has substantial opportunities in the U.S market, which reflects a positive market expectation for future performance for the company.
Afterpay has gone from strength to strength and is one of the best stocks to buy now.
Zip (Z1P)– Zip is a digital point-of-sale & fast-growing payment solution, that operates in the buy-now-pay-later sector similar to Afterpay and is another share to buy in this space. From FY18 Results Investor Presentation, Zip added 6,000 new retailers including a number of bigger players such as Officeworks, Tigerair, Kogan, and soon Virgin.
This means greater exposure to new customers and more variety of products on offer. Zip also added 440,000 new customers and is one of the best stocks to buy now.
Volpara Health Technologies (ASX VHT) – Volpara Health Technologies Ltd (ASX VHT) is a New Zealand-based healthcare research, and development company with global scalability.
The company provides medical software, specialising in managing the breast screening detection and the flow of information between the doctor and the clinic taking the screening mammogram x-ray. With strong growth and technology disrupting the health industry, Volpara has good growth prospects and is a share to buy.
Henry Fung is a Partner Managing Director and co-founder of MF & Co. Asset Management. He is a highly experienced equities, derivatives and financial markets professional with over 12 years of experience. Henry specialises in building trading algorithms & systems, quantitative & qualitative analytics across macroeconomic, fundamental and technical disciplines and currently runs the MFAM VPAC AU/US models portfolios. The management Partners and Adviser team have decades of experience between them, with experience from major Investment Banks and Brokers. Their Advisers are highly experienced, having dealt with some of the wealthiest clients in Australia.
Categories: Australian Stocks