The Sohn Hearts and Minds 2018 Conference is happening today, where leading Australian investors name their top picks for over the next year.
Here are some of the choices:
Reece Ltd (ASX: REH)
Emma Goodsell from Airlie Funds Management went for the plumbing giant of Australia. The huge acquisition of US-based plumbing & HVAC business MORSCO dramatically changes the earnings profile of Reece – the new business will now generate earnings roughly half from Australia and half from the US.
The Wilson family have grown the business very successfully and a store roll-out in the US combined with higher margins could see Reece's share price recover strongly.
Nufarm Limited (ASX: NUF)
The Australian drought has caused a lot of damage to Nufarm but Blake Henricks from Firetrail believes it can take market share in the industry.
He also pointed out that Omega 3 supply is likely to be flat because of over-fishing, but Omega 3 can now be harvested from plant-grown canola, where Nufarm can take a 20% share of the market.
JB Hi-Fi Limited (ASX: JBH)
Tim Carleton from Auscap Asset Management went for the unconventional pick of the electronic goods retailer. House prices and Amazon are obvious problems facing JB Hi-Fi.
Trading at only 11x FY19's earnings he believes that this cash generator has been oversold and it's actually out-doing Amazon in several categories.
It also comes with a very handy grossed-up dividend yield of 8%.
Other picks
Some of the other picks included Geoff Wilson going for Bandai Namco, Beeneet Kothari choosing PagSeguro, Nick Griffin picked Amazon and Steven Glass went for Kar Auction Services.
Foolish takeaway
Of the three ASX choices that I covered above, I would definitely go for Reece. Whilst I'm happy there is an opposing view to the demise of JB Hi-Fi, I wouldn't invest in it. Reece seems like a high-quality business with long-term growth prospects, the pull-back could be a good time to buy in for a long-term hold.
