Buy Hold Sell: 5 all weather stocks

The past year has shown volatility like no other. After hitting rock bottom in March, the market has shot up over 50%, in just nine months. Nail biting investors sitting on the side lines have realised that owning strong, resilient companies will always win at the end of the day, no matter what is thrown at them. 

In this episode of Buy Hold Sell, Bella Kidman leads the panel in a discussion on 5 all-weather stocks - companies that will thrive in any market condition. Joining Bella is Ben Clark from TMS Capital and David Wilson from First Sentier Investors who discuss stocks including, 1) Macquarie Group - the ASX darling up 11% this month 2) Resmed - a biotech giant benefitting from the vaccine news and 3) Brambles - the supply chain company with stunning FY20 results. 

Additionally, the pair each bring their best pick for an all-weather stock they see performing 'rain, hail or shine'.

Notes: Watch, read or listen to the discussion below. This episode was filmed on 5 November 2020

Edited Transcript:

Bella Kidman: Welcome to Buy Hold Sell brought to you by Livewire Markets. I'm Bella Kidman and today we're going to be discussing all-weather companies. These are stocks that can perform rain, hail, or shine. And to talk about this today, I'm joined by Ben Clark from TMS capital and David Wilson from First Sentier. David, I'll start with you. Macquarie Group, the silver donut, an ASX darling, buy, hold, or sell?

Macquarie Group Ltd (ASX: MCQ)

David Wilson (Buy): For us it's a buy. They've done an amazing job over the last decade, growing their business outside Australia. Only 30% of the earnings are from Australia and they earn an ROE 500 basis points above Morgan Stanley and Goldman Sachs. That's pretty impressive.

Bella Kidman: Ben, it seems to be quite a staple in all Australian portfolios. Buy, hold, or sell?

Ben Clark (Hold): Yeah, and I think with good reason. I'd be a hold, but this business does have a great future. I think they're world experts in infrastructure investing, which we're going to see under Biden. They've really pushed hard into green energy, which is almost perfectly positioned again with what's going on in Europe and the US, but there is short-term uncertainty around the earnings. The share price has really rerated, but close back to an all-time high. So hold from me.

Resmed Inc (ASX: RMD)

Bella Kidman: Okay, Ben, Resmed, up 5% off the back of the vaccine news. Buy, hold, or sell?

Ben Clark (Hold): Yeah. This is a hold as well I think, although it's our largest holding. The sleep business should really accelerate in 2021. Doctors haven't been worried about treating people with sleep apnea. The ventilator business should come off a bit, but that's a smaller part. And the Braintree, the tech business is really firing and COVID's given it a leap forward, but again, given the valuation, it's a hold.

Bella Kidman: David is Resmed a stock you're losing sleep over? Buy, hold or sell?

David Wilson (Hold): For us it's a hold, sounds a bit boring. We were very sceptical about their initial move into tech that Ben talked to, but they've done an amazing job in that space. So we think the earnings are very much in place but at these sort of prices we're a hold.

Brambles Ltd (ASX: BXB)

Bella Kidman: Okay, sticking with you, David, Brambles, one of the world's largest supply chain companies, buy, hold, or sell?

David Wilson (Buy): For us, it's actually a buy. We think that they've actually got through the COVID period, they actually generated a lot of free cash during that period. And I think that the new management has actually taken some of the volatility out of the earnings that we've seen historically. So we're a little bit more comfortable with that stock now.

Bella Kidman: Okay. Ben, Brambles achieved of change of global revenue of 4.7 billion US dollars in FY20, buy hold or sell?

Ben Clark (Hold): Yeah. Look, this business held its earnings really well. I've got a hold again, mainly again because of valuation. The share price is higher now than I think it was at the start of COVID, but it arguably deserves to be so. The management's done a great job, earnings you would have thought would have gone off a cliff, but they've actually held up very well, and margins seem to be expanding. So long-term probably a buy, in the short-term a hold.

CSL Ltd (ASX: CSL)

Bella Kidman: Okay. Ben, what's that one stock that you think can survive through any condition?

Ben Clark (Buy): Well, CSL, I think it's a global business. The Securus flu business has been given a huge free kick by COVID. We're going to see plasma collections get easier, more affordable, and the volume should really start to improve through 2021. The return of elective surgeries will be good for the demand side of the business. And then you've just got this phenomenal R&D pipeline that continues to flow sort of new products through to the market. So, all-weather stock, I think, that one looks pretty good to me.

James Hardie Industries PLC (ASX: JHX)

Bella Kidman: David, hard to beat CSL, have you got an all-weather stock for us?

David Wilson (Buy): Like CSL, but the stock we like is James Hardie. It's a stock that, like Resmed, like Macquarie, like Brambles, like CSL, it's the global leader in its space. And it's also got the cyclical benefit of a recovering US housing market. And the market is waiting to see how they improve the earnings in Europe. So for us, it's James Hardie.

Bella Kidman: Well, put away those umbrellas because with these stock ideas your portfolio will be ready for any and all conditions.

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