FNArena’s Weekly Insights – September 22 2025

In this week’s Weekly Insights:

-September, The Gift
-Post-August Portfolio Maintenance
-Consensus Targets
-Defence Spending Has More Winners
-Ord Minnett’s Conviction List
-Special Reports

By Rudi Filapek-Vandyck, Editor

September, The Gift

Post August results season, the Australian share market is wrestling with a genuine identity crisis.

Should one buy more leverage to the AI megatrend? Are commodities now definitely back? Small caps, but not the discounted ‘value’ plays?

If anyone finds it difficult to answer such questions in a convincing manner then don’t worry; judging by this month’s price action, the market doesn’t know the answers either.

The one visible result from the local indecisiveness is a net -2% loss for the month thus far while other markets continue to steamroll to fresh new record highs. The Hang Seng in Hongkong is up 5.85% in September while Tokyo’s Nikkei225 has gained 5.45%.

Over in the US, the S&P500 is up more than 3% while the AI-driven Nasdaq Composite has added 5.48%. Even the more sobering Dow Jones Industrial Average (DJIA) is up 1.69% since August.

Bank of America’s global funds manager’s survey signals large institutions put a lot of additional money to work this month, with positive sentiment rising to the highest level in seven months.

And while concerns about elevated (and concentrated) price momentum for US markets is ever present, fund flows are directed towards Europe and emerging markets with global growth optimism on the rise.

In contrast, it is my observation a lot of commentary and predictions in Australia express discomfort with where indices and share prices are trading at; predictions and warnings about the potential for a significant sell-off have only become more common across social media platforms and elsewhere.

Of course, nothing is ever set in stone when it comes to financial markets and investing. US markets can still have that elusive downward correction –the AI trade is yet again overbought on technical indicators– or Australia can catch up, or a combination of the two scenarios occurs.

For those with a little bit of cash at hand, and more confident about the ongoing duration of the current bull market than worried about the potential for stumbles in the shorter term, September can provide opportunities that are harder to identify in offshore markets.

From this perspective, September weakness is actually a gift for investors rather than the disappointment many seem to be focusing on.

Post-August Portfolio Maintenance

While the ASX200 is only down -2%, below the surface many stocks have suffered greater losses.

A number of stocks that have my personal interest are now trading at double-digit percentage below freshly updated consensus price targets. In some cases this has been the result of upgraded targets on excellent results and a weakening share price.

I hope you can see why I am calling September weakness a gift?

Companies that come to mind include Car Group ((CAR)), Goodman Group ((GMG)), REA Group ((REA)), and ResMed ((RMD)).

Usually, the FNArena-Vested Equities All-Weather Model Portfolio comes out on top throughout local results seasons –it’s one key factor behind my conviction about investing in quality companies– but August 2025 did not play to the usual script and left behind an over-ruling sense of disappointment.

There was that once-in-a-generation disappointment from CSL ((CSL)), but a similar experience emanated from Woolworths Group ((WOW)), while unexpected operational weakness from Macquarie Technology ((MAQ)) and another leg downwards for shares in WiseTech Global ((WTC)) further added to the overall sour experience.

A number of positive performances elsewhere did not prevent share prices from weakening, like for the four companies I mentioned earlier. Put these two factors together and August has been, uncharacteristically, a rather negative experience for the All-Weathers.

Part of that experience is payback for the relative outperformance over the past three years, with portfolio rotation prominent and decisive last month, so I am not worried. This is simply how the cookie crumbles, as they say.

With my own assessment in mind (September is a gift), we’ve taken our time to digest the many re-assessments and reviews post August market updates. With 10% in cash, and looking to re-allocate for ongoing upside for the year ahead, it soon dawned a number of existing exposures could do with some added weight.

As such, most of this month’s reshuffling of the portfolio involves adding additional exposure to the high quality growers that have been in the portfolio for a while, in some cases a long while, and in which our trust and confidence remains undiminished.

Bottom line: while regular reviews and rejuvenation remain part of portfolio maintenance, it doesn’t always involve looking around for greener pastures elsewhere.

Paying subscribers have 24/7 access to my curated lists of All-Weathers and related sub-categories: https://fnarena.com/index.php/analysis-data/all-weather-stocks/

Consensus Targets

It’s not a secret I am an avid reader and user of the data, insights and tools available on the FNArena website.

One of the tools permanently on my radar are consensus price targets, with the extra comment I always try to use them as intelligently as possible.

What do I mean with that last part of the prior sentence?

Ahead of financial result releases I bear in mind a positive result is likely to push targets higher (so I am not by definition worried when the share price rallies above targets beforehand).

I also pay attention to outliers. For example, Ord Minnett setting a price target of $57.20 only for Hub24 ((HUB)) weighs down the average of the seven brokers that cover this company. Remove the negative outlier and the average price target for Hub24 jumps to $112.50 from $104.58.

In other words: that share price seemingly trading above its consensus target is actually still below it.

Having said so, I do keep in mind what is Ord Minnett’s main gripe about this company; it’s a leveraged play on the current bull market. When share prices tumbled back in April, the Hub24 share price sank and might have fallen into the abyss had general sentiment soured for longer.

I am also well aware that a company experiencing a downgrade cycle will most likely trade at a discount to its price targets and those targets will reset at lower levels upon every negative market update.

This is why you won’t find me getting excited about Aurizon Holdings ((AZJ)) or Healius ((HLS)), even when their share prices are exhibiting large discounts (apart from the fact that, in my option, these are truly low quality strugglers).

I am not your typical deep value investor, but this too is hardly a secret. Give me high quality with an elongated runway for growth any time, except at too high a valuation.

FNArena’s consensus price targets assist me with assessing when/whether this might be the case.

Also; when shares are trading at a seemingly ridiculous distance to their target, you’ve most likely not spotted an as yet undiscovered opportunity. Something’s wrong; it’s most likely a trap.

See also the following:

-FNArena’s Stock Analysis: https://fnarena.com/index.php/analysis-data/consensus-forecasts/stock-analysis/

-FNArena’s Icarus Signal: https://fnarena.com/index.php/analysis-data/consensus-targets/the-icarus-signal/

-FNArena’s R-Factor: https://fnarena.com/index.php/analysis-data/consensus-forecasts/the-rfactor/

-FNArena’s Sentiment Indicator: https://fnarena.com/index.php/analysis-data/consensus-forecasts/sentiment-indicator/

Defence Spending Has More Winners

One of the themes that has captured investors’ attention is global defence spending with US president Trump’s America first policy, war in the Ukraine and in Gaza, plus increased tensions throughout Asia all contributing to a new bull market for military equipment and expenses.

In Australia, the usual suspects to play the theme make up a small selection consisting of Austal ((ASB)), Codan ((CDA)), DroneShield ((DRO)) and Electro Optic Systems ((EOS)), while PWR Holdings ((PWH)) recently announced its first advanced cooling systems contract with the US government.

Dig deeper and there’s a number of lesser known small caps including Adacel ((ADA)), AML3D ((AL3)), Elsight ((ELS)), HighCom ((HCL)), Orbital UAV ((OEC)), and Titomic ((TTT)).

Expand the angle and one could even include mining companies such as Lynas Rare Earths ((LYC)) and Iluka Resources ((ILU)).

One sector best not forgotten in this regard are the engineers and contract services providers of which a number have long-standing relationships with the Australian government and defence force. Others recently announced their very first contract.

The possibilities to seek exposure through this segment are only broadening.

Candidates that spring to mind include Civmec ((CVL)) –also rumoured as a potential take-over target for Austal– and Ventia Services ((VNT)).

A recent research report by RBC Capital highlights Downer Edi ((DOW)) and Service Stream ((SSM)) –a notable newcomer in this market segment– are the key winners of Australia’s Defence Base Transformation Procurement Program.

Last week’s contract announcements saw $3.05bn added to Downer’s revenues (over six years) and $1.6bn to Service Stream’s while key incumbent Ventia was still awarded $2.7bn.

RBC Capital estimates respective first year contributions of $450m, $240m, and $400m.

All three stocks are rated Outperform with price targets of respectively $7.75, $2.50 and $5.50.

A list of Best Stock Ideas among global financial companies by the same broker has Zip Co ((ZIP)) included against a price target of $5.

Ord Minnett’s Conviction List

Analysts at Ord Minnett have updated their Conviction Calls, currently involving the following ten stocks:

-Aussie Broadband ((ABB))
-Beacon Lighting Group ((BLX))
-Brazilian Rare Earths ((BRE))
-Cuscal ((CCL))
-Qoria ((QOR))
-Regis Healthcare ((REG))
-SiteMinder ((SDR))
-Vault Minerals ((VAU))
-Veem ((VEE))
-Zip Co ((ZIP))

Special Reports

One section on the website not often highlighted is Special Reports.

Apart from 23 Special Reports put together since 2006, including Dividend Investing, The Smart Way and the two books I’ve written (all freely available for paying subscribers), this section also includes slides used during my presentations throughout the years.

The slides from my recent presentation in Canberra can be accessed through this section.

Review All-Weather Model Portfolio

The financial year ending on June 30th 2025 featured the return of Donald Trump in the White House and of extreme market volatility.

The second half of the year also saw doubt creeping into general sentiment towards AI and demand for data centres.

All in all, a gain of 13.85% (pre-fees) for the twelve months is not something to be unhappy about, right?

FY25 review of the All-Weather Model Portfolio: https://www.fnarena.com/index.php/download-article/?n=4B38C0EF-A173-8CE6-736A7AFC7B19FC49

Model Portfolios, Best Buys & Conviction Calls

This section appears from now on every Thursday morning in a separate update on the website. See Rudi’s Views for the archive going back to 2006 (not a typo).

FNArena Subscription

A subscription to FNArena (6 or 12 months) comes with an archive of Special Reports (21 since 2006); examples below.

(This story was written on Monday, 22nd September 2025. It was published on the day in the form of an email to paying subscribers, and again on Wednesday as a story on the website).

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views are mine and not by association FNArena’s see disclaimer on the website.

In addition, since FNArena runs a Model Portfolio based upon my research on All-Weather Performers it is more than likely that stocks mentioned are included in this Model Portfolio. For all questions about this: contact us via the direct messaging system on the website).

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