With the Reserve Bank last week declaring the end of bond yield curve control, the era of COVID-19 stimulus is winding down.
This leaves great uncertainty about which direction ASX shares are headed in.
Do stock prices already have rate rises baked in? Or will it still be a shock to investors when it happens?
The unpredictability means that selecting ASX shares to buy based on the characteristics of the underlying business, rather than external influences, becomes more important.
It’s with this lens we examine 2 stocks that Catapult Wealth portfolio manager Tim Haselum this week recommended as “buys”.
Let’s celebrate with drinks and pokies
Endeavour Group Ltd (ASX: EDV) only listed on the ASX in late June, but is no newbie to the game.
The $12.8 billion liquor and hospitality venture was spun off from $47.9 billion supermarket giant Woolworths Group Ltd (ASX: WOW).
“The company owns the Dan Murphy’s liquor chain and ALH Hotels,” Haselum told The Bull.
“Alcohol retailing has been strong throughout the pandemic.”
Endeavour shares started life at $6.50 but, at Monday’s close, they were going for $7.18.
As COVID restrictions lift around Australia and people return to hotels, pubs and backyard parties, Haselum has high hopes for the upward stock price trend to continue.
“We see upside from its hotels and poker machines. We expect a stronger performance moving forward.”
Pleasingly, investors received Endeavour’s latest update positively a couple of weeks ago, sending the stock shooting up.
According to CMC Markets, other analysts don’t necessarily share Haselum’s view. Four out of 10 rate the stock as a “strong buy”, but 3 classify it as a “sell”. The other 3 are neutral, calling for a “hold”.
ASX share absolutely beaten-up, but not down for the count
Shareholders for artificial intelligence (AI) services provider Appen Ltd (ASX: APX) have suffered greatly in recent times.
They’ve watched in horror as the former market darling lost almost 70% over the past 12 months.
That’s not putting off Haselum though.
“We like the company and believe it’s undervalued. It has strong rebound potential.”
The portfolio manager liked Appen’s recent acquisition of mobile location data provider Quadrant Global and believes the demand for AI will remain “strong” into the future.
“This language technology and data services company has reduced guidance. But the stock is trading at a discount on these valuations, in our view.”
Other analysts seem to agree with Haselum that Appen is far from permanent damage.
Out of 11 professionals surveyed by CMC Markets, 5 rate the stock as a “strong buy” and one counts it as a “moderate buy”. Only one analyst rates it as a sell, while 4 are recommending a “hold”.
In fact, the team at Citi has a price target of $17.10. Appen shares closed on Monday at $11.
