Ask A Fund Manager
The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Bell Direct market analyst Grady Wulff names the two ASX shares that are ripe to buy now.
Investment style
The Motley Fool: How would you describe your services to a potential client?
Grady Wulff: I'm Grady Wulff, the market analyst at Bell Direct, which is an investment platform for buying and selling shares listed on the ASX. Our goal is to make the lives of all Australians better by making their investment journey nice and easy, and intuitive. My role is to source information, identify different market trends, produce timely market updates, create analysis pieces to help our clients save time and stay informed on what's happening on the markets.
MF: At Bell Direct, when you're helping clients invest in Australian shares, what's the investment philosophy you take?
GW: It really depends on the investment goal of our clients. So we're very intuitive and very tailored to the client's investment goals. So whether they're a trader, whether they're investors, whether they are looking for high yields or just growth stocks, value stocks. We've got the strategy builder on our platform, which helps you identify different sectors and different stocks that will meet your investment needs.
MF: You used to be a finance journalist, but now you're on the investment side of the fence. How did that come about?
GW: I actually started in sports journalism, then I moved into news journalism, and then I got headhunted to go into finance journalism in Perth with a very retail focus at [finance app] Grafa. That was tailored towards new investors and retail investors who are just starting out their journeys.
Then I got headhunted to come to Bell Direct. So very, very lucky, and I feel like I've learned so much since hitting the ground running in Sydney, but I'm very lucky to be here, and I love it so much.
Hottest ASX shares
MF: What are the two best stock buys right now?
GW: I'm going by Bell Potter research, given it's in-house. For me, having looked through them, Nufarm Ltd (ASX: NUF) is a really strong stock for me moving forward. Bell Potter maintains a buy rating on it with a price target that's been raised to $7.15. Shares in the company are up 21% year to date.
The reason that the house has a buy rating on it is because of the strong FY22 results that were released. The company had pretty strong headwinds in the way of deregistrations in Europe and dry conditions across the Mediterranean and North America in the second half particularly, but we expect those headwinds to be mitigated in FY23 and drive normalised demand in the US and Europe.
The company also has really strong continued growth and revenue for the Omega3 products. I think it's through the canola. So they're doing really well, and they've got a really positive year-end outlook. So we are really, really bullish on this one. They've got strong cash flow, revenue's going up, operating EBIT went up 24%. So yeah, we're really bullish on Nufarm at the moment.
MF: Great. What's your second pick?
GW: My second one's Best & Less Group Holdings Ltd (ASX: BST). I love this stock.
We've seen retail stocks recently being beaten down this year amid rising interest rates, and obviously consumers are a lot more conscious about what they're spending their money on.
But this positions Best & Less to really capitalise and benefit from the change in consumer behaviour from luxury shopping back in the pandemic, when we had all that money when we were sitting at home doing nothing, and we had so much money to spend, to now being more value shoppers — buying things that are less discretionary, have less replacement cycle and more sustainable products.
So Best & Less is really, really positioned well to capitalise from this.
They're also looking to open 11 new stores in FY23, so they're on the expansion front. They have healthy inventory positions, strong margins compared to peers, and the pricing power that they have is really strong because they're a stock developer as well.
So yeah, Best & Less, I think, is one that we are very bullish on at Bell Potter, with a buy rating and a price target of $2.60. One to watch in 2023.
MF: It's interesting to get your insights about Best & Less because it's one retail stock that we don't hear that much about.
GW: Exactly. I actually love looking at it.
