Our Director of Trading, Trent Primmer, was featured in Stockhead's MoneyTalks segment discussing broader macro trends leading to his top stock picks.
The Russian-Ukraine conflict, which Primmer claims has led to a "push and pull" scenario between the two largest superpowers, is one of the more prominent macro trends that BPC has been monitoring.
Trent says:
“Most companies are clear on how COVID has impacted their business and while China and Japan are still having issues with the virus, for the most part it is back to business as usual,” he explains.
“The energy crisis is still very much a thing with oil and gas supply outpaced by demand and inflation rising to levels we haven’t seen in 40 odd years.
Despite this, there are still many unpredictabilities in this market.
“It doesn’t make much sense in terms of historical trends and we’re facing some of the biggest issues all at once that we have ever faced in markets historically. You can’t expect everything to follow the same trends as what they usually have done.”
Trent Primmer, Director of Trading, BPC
In light of this, Primmer says BPC are invested in companies leveraged to the wider energy thematic and takes a contrarian view towards gold.
Trent says:
“I know the market hates gold right now but historically, it has always performed well, and it’ll just be a matter of time before everyone cottons on and says, ‘hey it’s cheap, the price should be a lot higher than where it is’.”
Top Stock Picks
Whitehaven Coal (ASX:WHC)
Whitehaven Coal is proud to be the leading Australian producer of premium-quality coal. The Company is the dominant player in Australia’s only emerging high-quality coal basin. We help power developed and emerging economies in Asia where there is strong and growing demand for our product, particularly for use in high-efficiency, low-emissions coal-fired power stations.
Trent's comments:
“This is where we have parked a large proportion of our funds to get access to the trend in investment towards thermal coal.
It is the only pick we have in thermal coal – there is a lot of liquidity through the stock, it has a very large market cap of around $7.5 billion, tiny bit of yield, but we have made roughly 70 to 80 per cent off it since the start of the year.
A lot of these businesses that are well capitalised with strong balance sheets and relatively low debt are well run and have been around for ages.
They are part of the furniture so to speak in terms of Aussie infrastructure and will benefit considerably from investors getting exposure to coal.
Demand is not just going to taper off that quickly in the short term.
Looking at alternatives to oil and gas, what you’ve got is supplies of oil and gas tapering off around Russia which is negative for the global economy so demand should still continue to outpace supply.”
Woodside Energy (ASX:WDS)
Woodside Energy is a global energy company, proudly Australian with a spirit of innovation and determination. They provide energy that the world needs to heat homes, keep lights on and support industry. The Company aims to thrive through the global energy transition with a low-cost, lower-carbon, profitable, resilient and diversified portfolio.
Trent's comments:
“Primmer says while Santos (ASX:STO) pay a ‘bit of a divvy’ and are leveraged to the strong oil and gas price, his favourite stock in the space is Woodside for its high-quality exposure to LNG.
Woodside have the strongest exposure to LNG globally and its projects should feed into the energy crisis in Europe.”
Dateline Resources (ASX:DTR)
Dateline Resources Limited (ASX: DTR) is an Australian ASX-listed company focused on gold mining and exploration in North America. The Company owns 100% of the Gold Links and Green Mountain Projects in Colorado, USA and has entered into an agreement to acquire the Colosseum Gold Mine in California.
Trent's comments:
“While DTR are a smaller-cap stock, Primmer says they are a US-gold developer with around 1 million ounces of gold at 1.2g/t, which underpins their valuation.
DTR’s focus is the Colosseum Gold Mine in East San Bernardino County, California which it acquired from Barrick Gold back in March 2021.
A recent gravity survey at the site has revealed multiple rare earth drill targets, about 1km from the Colosseum open pit, which strikes north-northwest over 2,000m and varies in width between 200m and 450m.
The company believes there’s potential to develop underground access to the target from the base of the Colosseum open pit mine.
They are capped at around $50 million Aussie and have mining leases just north of Mount Pass, which is the richest rare earth mine in the world and the only operating rare earth mine in the USA.
To me, this company looks good, and they have just raised capital to expand their drilling program but their strategy for producing gold also looks quite good.”
Barclay Pearce Capital team members are often featured by the media, sharing their insights on the market. Receive the latest market summaries and market-moving news, subscribe to Deal of the Week
