Money talks, is Stockhead’s regular analysis of ASX stocks that experts are currently reviewing.
Today we hear from Dylan Curtis, a senior dealer at Lazarus Capital Partners.
Curtis is a fan of “countercyclical stocks” – stocks that can win even when the market is down or volatile.
âOur strategies would be much more micro-centered while waiting for certain macro events to occur, such as the [US] elections â, he declared Storer.
âHand sanitizers and antibacterials, as well as rubber gloves and face masksâ¦ they were hot there for a fleeting moment.
âBut then the main thing is the technological change that is accelerating – because of the pandemic. So these are the Internet of Things, cloud computing services as well as any form of delivery service.
While noting that tech stocks as well as gold stocks generally hold up during COVID-19, Curtis said the tech sector is breaking down into smaller micro-sectors.
He cited the example of Amazon (NDQ: AMZN), noting that it was multichannel.
âIt’s more than just a tech company, as everyone knows. They are in the packaging, the delivery, the staffing and will soon be in the aerospace industry with drone delivery as well, âCurtis said.
“So we believe there is a new breakthrough in this technology sector, but overall technology and gold have been very successful.”
While Curtis was bullish on the tech and gold sectors in general, he named a “big” and a “small” choice in both sectors.
Appen is one of the few stocks involved in artificial intelligence (AI) and machine learning. It provides language technology data and services that are used to create AI and machine learning products.
Appen listed five years ago at 50 cents a share and now sits at over $ 30. But it lost about 25% of its value in three weeks since its half-year results.
Although Curtis admits that Appen’s results could have been better, he is still optimistic.
âIt was a soft result, I think. A lot of their income which we found was quite awkward, it’s project-based contract work and so it contributed to the low result, âhe explained.
“But we are buying it from this weak result because we believe it is a market leader and there was kind of a cyclical nature in their cash flow.”
Buddy is one of those “cool little businesses” that Curtis studies.
Although it has multiple activities, their âmain showâ is their smart lighting business – LIFX which has seen particular success in recent months.
“They received fairly large orders in record volumes“Curtis noted.
âWhat we’re thinking, I guess, is the shift to consumers. People are spending more in homes right now – we’re locked in.
“Consumer discretionary is falling in some areas, but people are spending more money in their homes and this is related to it.
While the majority of gold stocks are small cap exploration companies which may not produce, Gold Road is one of the few to have achieved large cap miner status.
In the past 12 months, it has gained another 26 percent.
Curtis says it’s a gold producer who benefited from the decline in the AUD for much of 2020. But even with the AUD appreciating, he sees an advantage in the company as she makes money with her project.
âAlthough this Australian dollar tailwind is over, they have an interest in the GruyÃ¨re mine, they own 50%,â he said.
“And that provides them with cash flow and allows them further exploration opportunities in the Yamarna Belt of Western Australia.”
In naming De Gray, Curtis simply said: “We were incredibly impressed.”
Why? It went from 5 cents to over $ 1.50 behind its discovery of Hemi gold in northern Western Australia.
In fact, its market capitalization is higher than that of Gold Road, although it is only at the exploration stage.
Curtis also noted that the company quickly had to decide whether to continue with Hemi on its own or partner with one of the big miners.
He also noted that De Grey’s growth has accelerated since he raised $ 100 million last week.
âThis placement was made at $ 1.20, the stock opened at $ 1.26 once the placement was completed. That day it was $ 1.41, âhe said.
“With this injection of capital in this environment, you are going to see a lot of deer traders, which is part of an event strategy to participate in remittance arbitrage.”
âNormally you don’t see that – the stock is still increasing quite significantly. There are quite large profits in a short period of time.
By Nick Sundich.
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