Australian investors looking for strong returns in 2020 might want to pay attention to what leading fund managers are saying.
Two shares which fund managers appear to believe could go notably higher this year are listed below. Here's why they are positive on their prospects:
Honda Motor Co Ltd (NYSE: HMC)
If you're able to invest in international shares, then you might want to take a look at automotive giant Honda. The Senior Investment Analyst from Antipodes Global Investment Company Ltd (ASX: APL), Andrew Gibson, believes Honda is "a compelling investment opportunity" and notes that it currently trades on an extremely low multiple of 7x forward earnings.
Gibson is particularly positive on Honda's motorcycle business which has delivered six consecutive years of double-digit operating margins. This makes it Honda's most profitable manufacturing business. Another positive is that the business has grown revenues strongly in recent years and now controls around 25% of the global motorcycle market.
Pleasingly, Gibson appears confident this strong form can continue for some time. This is thanks largely to its massive opportunity in the Indian market. Antipodes' proprietary research is pointing to higher rates of Indian motorcycle ownership in the coming years. In fact, the investment company believes the Indian motorcycle market, which is already the largest in the world, has the potential to roughly double in unit terms over the coming decade.
In respect to its valuation, Gibson believes the market is mispricing its shares. This could have created a buying opportunity for investors. He said: "Honda's current multiple implies that it is a lower tier automaker with limited prospects. But the truth is, Honda is a company in robust health with a globally dominant motorcycle franchise, and for whom making cars is only its third most lucrative business."
oOh!Media Ltd (ASX: OML)
An investment update out of WAM Capital Limited (ASX: WAM) last week reveals that it is positive on this outdoor advertising and media company in 2020.
Its shares were strong performers in the latter part of 2019, contributing strongly to WAM Capital's outperformance over the financial year to date. As of December 31, the WAM Investment Portfolio had gained 8.9%, compared to a 3.6% gain by the S&P/ASX All Ordinaries Accumulation index.
But WAM Capital doesn't appear to be in a rush to sell its shares any time soon. Chairman Geoff Wilson said: "We continue to hold OML as we are positive about the out-of-home media sector over the long term."
