Jack Colreavy, our Investment Analyst, featured on ausbiz talking about the macro trends and stocks that may be benefitting from these forces.

Top stocks to watch: CSR Limited (ASX: CSR), Graincorp (ASX: GNC) and Booktopia (ASX: BKG)

Here is the transcript:

Annette Beacher:

"On and back to megatrends. And three stocks to play big themes. Jack Colreavy joins us from Barclay Pearce Capital, right here at the desk. Let's stop talking wages and currency for a minute. Let's talk big macro themes, and I believe one of them is online retail." 

Jack Colreavy:

"Well that's, I mean, that's no new, that's not new. Everyone's aware of that. And because of COVID, we've seen a much faster acceleration towards that theme. So, we've been looking at Booktopia recently, it only hit the boards in December. It's one of the few IPOs that has come on recently that is doing quite well." 

Annette Beacher:

"That hasn't crashed."

Jack Colreavy:

"No, no, not yet. So it's tracking about 15% up from its IPO price and it's travelling well. It's full-year guidance has actually been upgraded above the prospectus forecast." 

David Scutt:

"Let's talk about what's been going around the world, stimulus payments everywhere, physical stimulus in particular, elsewhere in the United States here, Europe. One of the benefactories has been the home building suppliers. CSR is amongst that list. That's on your list at the moment. What's attractive about CSR?"

Jack Colreavy:

"Well, whenever a stock hits an all time high that, genuinely peaks our radar. So, off the back of the home builders scheme, which got extended in the budget, I believe they're going to spend about $2 billion on that scheme. And the forecast suggests about a $30 billion multiplier effect down the line that's going to go into constructions and renovations, for all that. We also need to couple the fact with  that Australian spent 65 billion on international travel every year. So that money is now being spent in the home. And so that's flowing through to these, homemakers and the construction space. So CSR, is one of those shocks. It's recently hit an all-time high and they make building products. So whenever you have a product that the brand is synonymous with the name, they have gyprock, which is plasterboard. So it's like Google with search. So, they've got a very strong brand recognition there across all their product lines, and they're seeing record revenues as a result."

Annette Beacher:

"So does that make CSR a bit rich at the moment, or you think it's still a buyer with so much work left in the pipeline?"

Jack Colreavy:

"I think there's a lot more to come with this. Definitely just with the extension of that home builder program. We're going to see a lot more uptick in renovations and new home builds. They're suggesting over a hundred thousand new homes and 30,000 renovations."

David Scutt:

"Last week we're having a chat with GrainCorp chief executive Robert Spurway on the program. It's on your list as well I believe. Basically, when it comes to where the patterns are having to go and feed the world,  it's pretty complex. But you'd like to look at the company?" 

Jack Colreavy:

"Yeah. I'm not a meteorologist, but, looking at the trends in terms of rainfall, and the potential for a more La Nina effect, that's obviously going to flow through to those growers. So GrainCorp, one of the largest growers in the world operates on four continents. And so recently they upgraded their earnings, 140 million in first half, EBITDA, which is 33% on the prior period. So, one to look for continuing through that La Nina cycle." 

Annette Beacher:

"And of course going forward, we've been talking about… actually, who did we have yesterday and was talking about the Northern hemisphere conditions are not great. So that by definition we get the price rises down here in the Southern hemisphere." 

Jack Colreavy:

"Well, it's all on that opposite effects. So when La Nina is going on down here, it has the opposite effect up there. So it tends to fluctuate the prices in the different regions, but GrainCorp, nice and well and diversified working on different continents. So when it's not working on one level, it's working on the other."

David Scutt:

"Yeah. Reaping the rewards of the moment. Jack a real quick one to go and finish off and more a top-down view. When it comes to where you see the markets at the moment, how difficult or easy is it to find opportunities out there at the moment? Because people are talking well, it's a, no things are fully priced at the moment, so there's less out there to go and look at. What's your sense?"

Jack Colreavy:

"Yeah, you're a hundred per cent right there, It is a difficult market. And we're seeing a big transition at the moment away from those very high price growth stocks as inflation fears, creep into the picture. People are going into more defensive assets now. And we're seeing the rise of that commodity supercycle at the moment. Iron ore prices, copper prices, gold and silver are starting to tick up as well. I really liked silver from a precious metal side of things, it's a store of value. But also 50% of silver is used for industrial purposes. 30 grams of it goes into a solar panel. So, there's opportunity to play that, renewable transition as well, from that angle." 

David Scutt:

"There we go. Silver, maybe we want to go and keep an eye on that. Jack Colreavy from Barclay Pearce Capital, thanks for joining us."

Jack Colreavy:

"Thanks for having me."

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