2019-10-22 09:49:291970-01-01 00:00:00

Experts Recommend Stocks

Amidst the intensifying trade war between Washington and Beijing, fund managers have a tough job in deciding what shares to invest in. The two stocks General Motors Company (NYSE:GM) and Myer Holdings Limited (ASX: MYR) have been singled out by experts on the Future Generation Investment Forum as the top picks for this week.

General Motors

General Motors Company (GM) is an American multinational firm based in Detroit that designs, produces and distributes cars and car parts, while also providing financing services. GM boasts a broad product range of cars, trucks, SUVs and electric vehicles. GM stands as one the largest vehicle manufacturer in the world, having expanded operations to countries all over the world.

Adrian Warner is the Chief Investment Officer of Avenir Capital, having held the position for more than 8 years. He has extensive experience from his time with different private equity funds. Avenir Capital specialises in fundamental and value based investments, and has pinpointed GM as undervalued. The current price range sits at around $USD 35 – 40/share, while Warner has previously valued the share to be worth as much as $USD 60/share. The fund manager said that the firm was trading at a price-to-earnings ratio of 5.5 times, which was “way too cheap”. Indeed, other comparable firms such as Blue Bird (BLBD) or Fox Factory Holdings (FOXF) are trading at PE multiples above 10 times, which supports Warner’s assessment.

The current price possibly reflects the stubbornness of investors who are still looking at GM through an old lens. General Motors faced significant troubles back in 2009 after years of losses following a decline in market share. With the passing of the Global Financial Crisis in 2008, the automotive industry still remained in trouble. General Motors was soon declared bankrupt and required a bailout from the government.

Warner’s high valuation can be attributed to how the company handled itself post-bankruptcy. General Motors cut its workforce by more than 70%, negotiated up $USD 30 billion off its pension liabilities and ceased defined benefit plans for new employees. Senior Management was also restructured resulting in dramatic cultural changes that fostered cooperation instead of conflict. Overseas segments were sold off and certain brands were discontinued; what remained was a leaner version of GM which was no longer unencumbered.

Recent developments in the trade war have made it more difficult, and Trump is expected to impose tariffs of up to 25% on imported vehicle parts. Tariffs could significantly increase the price of manufactured vehicles by up to $3000, and force consumers into the second hand market. The downside risk is reduced however as GM derives a large portion of sales from its truck sales, a market where it has a more loyal customer following. The decision to enact tariffs has been delayed until further notice.


Experienced investor Geoff Wilson of Wilson Asset Management has recommended department store chain Myer as a good buy, stating that he could see prices rise above $1/share. It is currently trading at around $0.65/share.

As a department store chain, Myer retails a range clothing, footwear and accessory items for men and women, as well as an assortment of homewares, electronics, furniture and food items. In 2006, Coles Myer divested Myer to a private equity fund. Since its listing in 2009 at $4.1/share, it has seen a consistent decline much to the chagrin of shareholders.

More recent financial performance of Myer has been sluggish. Total sales are stagnant as its cost base continues to rise. Myer posted an abysmal net profit after tax of $32.5 million dollars, less than half of the previous year. NPAT after implementation costs stand at -$486 million, the first loss posted by the firm since listing. Poor performance was blamed on poor consumer confidence and increased competition.

Geoff Wilson still believes there is hope for Myer, unlike other department store chains such as David Jones. He has pinned his hopes on the young CEO John King to turn things around. John King has planned to take costs out of the business, and already restructured much of senior management. He also plans to improve efficiency, lower capital expenditure and stop the practice of discounting to chase sales.

It remains to be seen however whether John King can revitalise the ailing firm. His strategy on paper does not seem revolutionary, and are standard management practices. Wilson has conceded that it may take years before earnings double, and that this represents a long term investment.

There is no doubt that the current political and economic climate has made investors nervous. Investors are now throwing their lot into defensive assets and commodities, but investors still need to think for themselves. Good research into a firm’s senior management or fundamental analysis can still reveal hidden opportunities and lead to a good investment.

By Oliver Ju

Click here for a 7 days access to our Lotus Blue Portal.

KOSEC does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information provided. KOSEC is intended to provide general information only. Please be aware that investing involves the risk of capital loss. This message is confidential and may be privileged. It is intended only for the use of the addressee named above. If you are not the intended recipient, any unauthorised dissemination, distribution or copying is illegal. We do not guarantee the security or completeness of information hereby transmitted and are not liable in either respect or in respect of any delay. Nothing in this message is intended as an offer or solicitation for the purchase or sale of any financial instrument. Any market prices or data, unless specifically verified and identified as such, are not warranted as to completeness or accuracy. Kodari Securities Pty Ltd (KOSEC) is a Corporate Authorised Representative (No. 399 556) of Longhou Capital Markets (AFSL No. 292464) which is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC wishes to disclose that KOSEC and its staff may hold stock they recommend in their own portfolios and that any decision to purchase recommended stock should be done so after the purchaser has made their own inquires as to the suitability to their own requirements. Click here to view our FSG.

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.



KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.


Latest TV Commercial