20 April 2024
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One of our marketing team at Switzer, Michael, recently sent me a promotional idea for my approval that said this: “How I achieved over 220% NET return and a 70% success rate in the past year.”
I went back to Mike and asked him: “Who achieved this unbelievable return?” and he said: “You!”
In our investment newsletter that goes out to subscribers (www.switzerreport.com.au), we have a group of long term stock analysts who’ve had a great record over 12 years of publishing this.
So I went back to Michael and asked where he got the numbers from. His reply was: “The 70% came from the 30 stock calls that increased in price (at the time of writing) from the 41 you made. So that’s 73%. And the 220% came from the sum of all percentage increases or decreases of each of the 41 calls (at the time of writing).”
While I knew I’d had a good run with my stock selections, I didn’t know they were that good in total!
And while I liked this news, I did say to Michael that he better get our numbers guy to check out that what he was saying was right. And it was!
By the way, I expected a good result from my selections because so many stocks have rebounded since the Coronavirus crash of the stock market in February/March last year.
I generally like to buy and tip quality companies that the market is beating up on. And because I’m a long-term investor, I wait for short-term sets against good companies and buy them when others are selling.
Right now, there are quality companies that are priced to perfection, such as CBA, BHP and Wesfarmers and therefore there’s less upside with them. And while I think they will go up in price over the next year, I want to now buy the companies that are unpopular because of the Coronavirus and the lockdowns.
So what are these stocks?
The classic one is Qantas (QAN). It’s badly affected by the virus, the slow vaccinations, the lockdowns and the uncertainty when life gets back to normal.
It’s now priced at $4.53 but the expert company analysts (who get paid to guess future profits and prices of businesses) think Qantas will be a $5.79 stock in the future, which is 27.9% higher!
Another company hurt by the virus and the lockdown is Webjet (WEB). Here the analysts think there’s 16.4% upside, once vaccinations permit both domestic and international travel again. Webjet isn’t one of my blue chip quality companies. It’s a more speculative stock. However, if it can survive these current headwinds, it could become a quality performer.
Another speculative tech play (based on how this company will be travelling in 12 months’ time) is Appen (APX). Here the experts think there’s 67% upside! Now these guys could be wrong about this speech data company, but even if they’re only 33% right, that would suggest a 20% upside.
Appen (APX)
The above chart shows that the company was a $26 stock before the Coronavirus crash, so at $12.50, it could easily see an improved share price as normalcy comes to town.
Another company that will do better when the lockdowns end here in Australia is Tyro Payments (TYR). Before the crash, TYR was a $4.38 stock. It’s now $3.40. The analysts see it heading towards $4.04, which suggests there’s a potential 18.5% upside.
Tyro terminals are used in many pubs, cafes, restaurants and retail outlets. When you swipe your credit card on the side, that’s usually a Tyro terminal. As hospitality gets back to normal, Tyro should benefit.
If you want to play in the buy now pay later (BNPL) space, both Zip Co (Z1P) and Afterpay (APT) are potentially good performers. Analysts think both have 12-14% upside. They currently have challenges from new rivals such as Apple, PayPal and the CBA, but I think these are businesses of the future.
Years ago I taught Economics to Anthony Eisen, the founder of Afterpay. And Zip Co is actually in my building in Sydney, so I call on the CEO/founders for interviews regularly, and they show up!
If you want a company that has been negatively affected by the pandemic but is one of our best businesses, then go for CSL. The analysts expect only a 4.1% upside but this stock price is now at $290. Before the virus, was a $336 stock! If CSL comes back next year, that would be a 16% gain. The company’s biggest profit-maker is collecting plasma in the US and the virus concerns scared off a lot of its donors who get paid to give blood.
As normalcy comes back, demand for blood will rise, and that will be good for CSL’s bottom line.
So here are my 6 stocks that I think have upside over the next 12 months:
And if you’re asking: “Does Switzer have skin in the game with these stocks?” Well, the answer is: you’re darn tootin’ he does. They’re not without their risks but I suspect they’ll be pretty good performers over the next 12 months. By the way, as a financial adviser I have to put in this warning: what I’ve written is NOT financial advice but just my best guess on this tricky investment world we’re all in.
