Fund managers pick 2 healthcare stocks and one agricultural product maker as Australian companies that can withstand market volatility.
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As the S&P/ASX 200 Index (ASX: XJO) sinks this month, it has never been more important to be selective about which stocks to buy.
The ASX 200 has dipped 3.9% in September, and no one knows whether this is the start of a larger correction or if it’s a temporary hiccup.
Fortunately, 3 experts have each revealed one ASX share that they think will go gangbusters over the next 12 months.
The quality of these businesses, they say, could prove to be more resilient against market corrections than more speculative, momentum-reliant stocks.
The ASX share that ‘consistently outperforms’
Switzer Financial director Paul Rickard rates CSL Limited (ASX: CSL) as “Australia’s best healthcare company”.
“I just love CSL for all the right reasons,” he told Switzer TV Investing.
“It consistently outperforms. In other words, it tells the market one thing then delivers results that are better.”
CSL’s massive plasma collection business in the US took a hit after COVID-19 arrived due to lower numbers of donors coming forward.
But, in the long run, the coronavirus might have had a positive impact on CSL and its peers.
“The pandemic has got to be good longer-term for health companies. I think we’re all going to be a lot more conscious of these things,” he said.
“My guess is CSL is going to be one of those companies that’s going to be well-supported even in a bear market.”
CSL shares were trading at $306.78 on late Tuesday morning, which is 7.6% up so far this year.
‘Oversold’ and ready to ‘bounce back’
A fertiliser producer is Burman Invest chief investment officer Julia Lee’s pick.
“If you’re talking about the next one year, probably Nufarm Ltd (ASX: NUF). I think it’s oversold at the moment. The market’s too pessimistic,” she said.
“It’s already started to bounce back but I think that bounce is going to continue.”
The sector is in the midst of a structural shift, Lee believes.
“Fertilisers in Europe are reaching a record price and a part of that story is because of the electricity price over there, which is at record highs,” she said.
“Fertiliser companies here in Australia are in a good spot.”
Late Tuesday morning, Nufarm shares were going for $4.62 which is 11.7% up for the year thus far.
‘Cheap’, ‘defensive’ and ‘premium’ ASX share
Tribeca Investment Partners portfolio manager Jun Bei Liu likes the look of Ramsay Health Care Limited (ASX: RHC).
She said Ramsay’s already the leader in private hospitals in Australia but has plenty going on elsewhere too.
“Many years ago it went offshore — so it went to France, the UK. In those markets, it’s gradually building a very strong market share.”
The stock was trading for $69.74 late Tuesday morning, which is already up 11.3% for the year.
But with the stock below pre-COVID highs of around $80, Liu reckons it’s still good value as a “premium” and “defensive” business.
“Whereas Ramsay is trading on just over 20.”
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Motley Fool contributor Tony Yoo owns shares of CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. and Cochlear Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Cochlear Ltd., Ramsay Health Care Limited, and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.