As reporting season approaches, the Australian market looks expensive, with muted expectations for earnings growth. That’s the view of Alvia Portfolio Manager, Chris Scarpato, who recently joined ausbiz’s Juliette Saly to break down the current investment landscape.
Despite stretched valuations, we continue to find opportunities where sentiment is low, but long-term potential remains strong.
CSL (ASX:CSL) has faced concerns over patents and tariffs, yet its core plasma and immunodeficiency businesses continue to demonstrate strong long-term growth potential. Recent acquisitions further bolster its outlook, reinforcing our view that it remains a compelling business despite near-term headwinds.
Domino’s (ASX:DMP) has delivered mixed performance globally. While its Australian operations remain strong, challenges persist in key international markets like France, Germany, and Japan. However, with a new CEO and a renewed focus on cost efficiencies, we see potential for improved franchise profitability, which could drive a turnaround.
Banks remain significantly overpriced relative to global peers. At Alvia, we have steered clear of the sector – a call that has been tested by strong performance from banks in 2024. Meanwhile, we remain cautious on high-growth tech stocks, where lofty valuations leave little room for error. In this environment, even minor missteps could trigger sharp market reactions.
In an uncertain market, resilience matters. We continue to favour businesses with strong fundamentals, pricing power, and stable cash flows – characteristics often found in what some might call ‘old-world’ industries.
Watch Chris’s full interview on ausbiz in the link below.