After ending 2018 on a bad note, the performance of the stock market in the first two months of 2019 has gave investors a reason to cheer. If you are looking to repeat the splendid performance, here are some strategies for you to consider.
Investors Takeaway: 3 Strategies If You Want To Beat The Market Again By DBS
- Take Advantage Of Interest In S-REITs
With Fed Chairman Powell re-iterating the Fed’s dovish stance to be patient on rate hikes, interest in REITs should sustain going forward. The consensus now appears to be zero rate hikes for this year as the Fed continues to monitor how the economy evolves.
Previously, DBS recommended investors to focus on large cap REITs in resilient segments such as retail and industrial (warehouse and business parks). DBS likes these large cap REITs for their domestic focus and relatively stickier demand. Moving forward, DBS continues to like large cap S-REITs. In particular, DBS recommends Mapletree Commercial Trust, Mapletree Logistics Trust, Frasers Logistics & Industrial Trust and Mapletree North Asia Commercial Trust as its large cap picks.
But DBS also recommends investors not to neglect exposure in some small-mid cap REITs as investors’ interests are expected to gradually spill into the small-mid caps. Among the S-REIT small-mid caps, DBS likes OUE Commercial Trust, Ascendas India Trust and CapitaLand Retail China Trust.
Mapletree Commercial Trust: BUY, TP $2.00
Mapletree Logistics Trust: BUY, TP $1.50
Frasers Logistics & Industrial Trust: BUY, TP $1.20
Mapletree North Asia Commercial Trust: BUY, TP $1.45
OUE Commercial Trust: BUY, TP $0.60
Ascendas India Trust: BUY, TP $1.25
CapitaLand Retail China Trust: BUY, TP $1.65
- M&A Talks To Drive Offshore And Marine Sector
After news of Hyundai Heavy Industries (HHI) indicating interest to acquire Daewoo Shipbuilding & Marine Engineering (DSME) as well as the merger of CapitaLand-Ascendas Singbridge, merger speculation has started to pick up.
Despite offshore and marine underperforming and not showing strong signs of recovery, DBS believes that interest in the sector could pick up if merger speculation returns. DBS notes that there could be renewed speculation of a merger between Singapore Yards to enhance competitiveness against global competitors from Korea and China.
To ride on the merger trend, DBS recommends investors to invest in Sembcorp Marine. DBS highlights Sembcorp Marine as its top pick for the sector because of its strong fundamentals and merger prospects. Even if an M&A does not go through, the current share price of Sembcorp Marine is a good entry point for investors as activity level, revenue and profitability are trending up. There is also renewed optimism on new contracts for production platforms for Brazil.
Sembcorp Marine: BUY, TP $2.40
- Go Safe With Steady Earnings
Some of DBS’ stock picks with strong earnings stability is backed by a strong order book such as ST Engineering and Yangzijiang Shipbuilding. DBS also highlights its preference for companies that come with a combination of yield and earnings growth trend like ComfortDelgro Corporation and Netlink NBN Trust. DBS also likes Starhub for its bombed out valuation despite its operational improvements.
ST Engineering: BUY, TP $4.15
Yangzijiang Shipbuilding: BUY, TP $1.82
ComfortDelgro Corporation: BUY, TP $2.57
Netlink NBN Trust: BUY, TP $0.87
Starhub: BUY, TP $1.92
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