FNArena’s Weekly Insights – July 18 2022

In this week’s Weekly Insights:

-Pre-August Observations
-Reporting Season: Early Signals
-ASX/S&P Index Rebalance Predictions
-Conviction Calls
-All-Weather Model Portfolio
-FNArena Talks

By Rudi Filapek-Vandyck, Editor FNArena

Pre-August Observations

To borrow a famous quote from Winston Churchill and make it my own:

You can depend upon the share market to do the right thing. But only after it has exhausted every other possibility.

And so it is with great delight that I have been witnessing the return of buyers to share prices in some of the highest quality and resilient business models listed on the ASX. Think CSL ((CSL)), Cochlear ((COH)) and ResMed ((RMD)), but also Amcor ((AMC)), TechnologyOne ((TNE)) and Woolworths ((WOW)).

Both analysts and investors might at times find it difficult to warm towards these High Quality stalwarts, usually because the valuation never looks as attractive as for lower quality, smaller cap and cyclical companies, but it is my observation when times really get tough and uncertainty dominates the broader picture, these are the Go-To companies that will stabilise and rise first amidst turbulent and volatile times.

Always difficult to pinpoint exactly when that moment arrives, but in 2022 it seems to have arrived in early June, just before share prices for the likes of BHP Group ((BHP)), Woodside Energy ((WDS)) and Fortescue Metals ((FMG)) started to break down. Take a look at share price graphs for the likes of CSL, Cochlear, Woolworths and TechnologyOne and admire how strong the rebound is that has occurred over the past six weeks.

Click to read the Full Report