Our top ASX picks in every sector

Morning Star AU04-07

It’s been an eventful year for investors so far. The ASX has been rocked to 10-month lows driven by geopolitical tensions in the Middle East and prolonged inflation fears. Morningstar Strategist, ...

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The ASX has been rocked to 10-month lows driven by geopolitical tensions in the Middle East and prolonged inflation fears. Morningstar Strategist, ...</p>\n\n<a href=\"https://www.morningstar.com.au/stocks/our-top-asx-picks-every-sector\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"ARR","symbol_name":"ARMOUR住宅房地产公司","start_time":0,"source_url":"https://www.morningstar.com.au/stocks/our-top-asx-picks-every-sector","article_id":"2625981052","we_media_id":null,"thumbnails":[],"rights":{"source":"morningstar_stock","url":"https://www.morningstar.com.au/stocks/our-top-asx-picks-every-sector","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2625981052","pubTimestamp":1775491200,"columns":[],"sourceInfo":{"source_id":"morningstar_stock","name":"Morning Star"},"weMediaInfo":null,"summary":"It’s been an eventful year for investors so far. The ASX has been rocked to 10-month lows driven by geopolitical tensions in the Middle East and prolonged inflation fears. Morningstar Strategist, Loch","collect":0,"end_time":0,"defaultTopTitle":"morningstar.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"ARR":"ARMOUR住宅房地产公司","BK7510":"REITs概念","BK7154":"办公室房地产信托","DXS.AU":"Dexus","ARR.AU":"American Rare Earths Ltd","BK7113":"保健护理机构","BK7122":"办公房地产投资信托","BK7095":"多种金属与采矿","RHC.AU":"RAMSAY HEALTH CARE LTD","BK4110":"抵押房地产投资信托"},"translate_title":"我们在各个领域的ASX首选","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DXS.AU":0.9,"ARR":1,"ARR.AU":1,"RHC.AU":1},"content_text":"It’s been an eventful year for investors so far. The ASX has been rocked to 10-month lows driven by geopolitical tensions in the Middle East and prolonged inflation fears. Morningstar Strategist, Lochlan Halloway, explains that markets are pricing a broad spectrum of risk, ranging from a brief disruption to, in the extreme case, an oil shock with no modern precedent. There are too many unknowables to make confident point predictions about how this unfolds but Aussie equities now trade at a modest 5% premium to fair value, what we would call fairly valued territory. Importantly, markets haven’t looked this attractively priced since Liberation Day. In this article I’ll explore our top analyst picks in each sector. Basic Materials James Hardie Industries Plc JHX ★★★★Economic Moat: WideFair value estimate: $42 per shareShare price: $28.14 (as at 01/04/2026)Uncertainty Rating: HighPrice to fair value: 0.67The most recent earnings season saw James Hardie modestly lift fiscal 2026 guidance, despite lower sales volumes in siding and trim. Shares rallied 11% on the announcement but the update is largely as we expected. Soft US housing is leading to high-single-digit volume declines, however we think that it will be partly offset by a low-single-digit increase in price. The business is also on track to achieve guided cost savings and sales benefits from the Azek combination next year. Our analysts think the company has a tremendous runway for growth with our fair value estimate at AUD 42 (USD 30 at Feb. 11’s exchange rates). Aging US houses provide a pipeline of repair-and-renovation customers, while a strategy to win contracts with large homebuilders is increasing volumes in new builds. We think the downtrodden share price (-30% LTM) reflects concerns about the price paid for Azek and whether the merger’s benefits can be realised. In our view, Azek’s products offer similar durability and low-maintenance benefits and can be bundled at a reasonable price. We see a decent opportunity for sales of the acquired products and are optimistic that significant cost savings can be extracted from the merger. While we’re not as confident as management on the benefits, we think that’s more than compensated by the lower share price.Communication Services Spark New Zealand Ltd SPK ★★★★★Economic Moat: NarrowFair value estimate: $3.10 AUD per shareShare price: $1.72 (as at 01/04/2026)Uncertainty Rating: Medium Price to fair value: 0.55Spark New Zealand reported a 5% lift in first-half fiscal 2026 adjusted EBITDAI to NZD 457 million, excluding the recently sold data center unit, on a revenue fall of 1% to NZD 1.9 billion. The in-line result arrests the negative earnings cycle, which began in the second half of fiscal 2024. Despite tepid top-line performance, the benefits of cost-cutting efforts are flowing through, with first-half operating expenses down 10%, or NZD 51 million, from a year ago.The company generates steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark’s scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behaviour in mobile.Challenging economic conditions in New Zealand, combined with structural headwinds facing the mobile and IT units from austere government and enterprise customers, have exposed Spark NZ’s bloated cost base. Earnings are currently weak but are expected to recover as New Zealand’s economy improves. A reinvigorated focus on costs is likely, with decent costout targets. Regarding our earnings and dividend forecasts, we believe the balance sheet will remain reasonable, especially with recent asset sales. None of this is reflected in the share price, nor is Spark’s moaty mobile business. This is supported by a stable and rational mobile industry structure, with Spark the market share leaderAs such, shares in narrow-moat Spark are materially undervalued. With free cash flow on track to rise by 20% in fiscal 2026, our full-year forecast DPS of NZD 0.16 looks secure, even prior to earnings growth from fiscal 2027. At current prices, that equates to an attractive yield of 7%-plus.Consumer Cyclical Amcor PLC AMC ★★★★★Economic Moat: NarrowFair value estimate: $90 per share Share price: $58.10 (as at 01/04/2026)Uncertainty Rating: Medium Price to fair value: 0.65Amcor is a global producer of plastic packaging primarily for the fast-moving consumer goods industry. About half of group sales are derived from North America and the remainder is split equally between Western Europe and emerging markets. ANZ sales make up less than 5% of group sales.The company’s strategy revolves around strategic acquisitions and divestments, market share growth, and investment in capacity and capabilities. We see several merits to its strategy, which has led to organic and acquisitive growth and average annual returns on invested capital of 16% over the five years to fiscal 2025, comparing favourably against a weighted average cost of capital of 8%.We think investors fail to appreciate the underlying defensiveness of Amcor’s exposure to its food and beverage customers. While our short-term outlook is for cyclically soft volume, we are positive for the longer term. We expect the company to incrementally improve future returns on invested capital. This reflects strong single-digit organic sales growth, driven by reinvesting free cash flow in emerging markets and higher-margin, differentiated products. The Bemis deal in 2019 cemented Amcor’s position as the largest plastic packaging supplier in North America, with more than twice the market share of its nearest competitor. The significant merger of global plastic packaging manufacturer Berry in 2025 for USD 8.4 billion has considerably increased Amcor’s ability to cross-sell Berry’s range to Amcor customers and vice versa. Consumer Defensive Endeavour Group Ltd EDV ★★★★★Economic moat: WideFair value estimate: $5.40 per shareShare price: $3.23 (as at 01/04/2026)Uncertainty Rating: LowPrice to fair value: 0.60Endeavour’s underlying pretax profit of AUD 408 million for the first half of fiscal 2026 was within its January guidance range. Group sales increased 1% year on year, though the core liquor retailing segment was virtually flat and retail sales momentum is still soft so far in the second half.The near-term outlook for liquor earnings is weaker than we had expected. Combined sales at its liquor chains have grown for six consecutive months, and its customers’ perception of value for money, a leading indicator, is reaching record highs. But its strategy to reset prices to win customers is crunching profits. In retail, gross profit margins are down nearly one percentage point to 24%. We now expect discounting to persist near term and trim our fiscal 2026 EPS by 5%. But we expect shelf prices to inflate again once Dan Murphy’s lower price base is established and lapped in August 2026. The market underappreciates Endeavour’s defensive long-term earnings outlook. We forecast that liquor sales momentum will improve, with sales growth reaching durable low-single-digit levels from fiscal 2027. Our assumption recognises that younger cohorts are moderating their liquor consumption, with changing drinking behaviours offsetting population growth and positive mix-shift to premium products. Nevertheless, we believe long-term liquor sales growth is underpinned by inflation and relatively defensive. In the smaller hotels segment, earnings are proving resilient.Energy Woodside Energy Group Ltd WDS ★★★★Economic moat: NoneFair value estimate: $43.80 per shareShare price: $35.09 (as at 01/04/2026)Uncertainty Rating: Medium Price to fair value: 0.80 As Australia’s premier oil player, Woodside Petroleum’s operations encompass liquid natural gas, natural gas, condensate and crude oil. The war in the Middle East, which started on Feb. 28, 2026, is a highly dynamic situation. While the US and Israel have achieved clear air superiority, Iran has effectively choked the Strait of Hormuz, threatening shipping deemed allied to the coalition forces. The business looked compelling before the geopolitical conflict in Iran, trading on something like 5x EBITDA prior to March. Now Brent prices have risen exceeding USD 100 per barrel on unconfirmed reports that Iran has begun laying mines in the Strait of Hormuz. The strait is one of the world’s most important maritime routes, with about 20% of global crude volumes passing through. For now, transit is halted with about 15 million bbl/d stranded.US President Donald Trump has threatened to destroy this infrastructure if Iran continues to restrict shipping. This would be a meaningful restriction on the world’s 104 million bbl/d demand. Kharg Island is responsible for 90% of Iran’s exports, or 4.6 million bbl/d of liquids. But even in such a scenario, longer-term, we still think Saudi Arabia and the United Arab Emirates have enough spare capacity to drive prices back down to midcycle. A prolonged conflict would likely only delay but not impair this outcome.We maintain our USD 65 per-barrel midcycle Brent crude price. Only in a remote probability/high-severity scenario where an attack on Kharg Island knocks Iran’s exports offline, or where Iran carries out an impassible structural block, might we change our view. Our fair value estimates for no-moat Woodside increase by 4% to $43.80 per share. Our year-one and year-two earnings forecasts for upstream oil and gas firms consequently increase on average by 68% and 47%, respectively. However, futures curves decline steeply further out.Financial Services ASX Ltd ASX ★★★★★Economic moat: WideFair value estimate: $70 per shareShare price: $53.35 (as at 01/04/2026)Uncertainty Rating: LowPrice to fair value: 0.76The Australian Stock Exchange reported first-half underlying net profit after tax up 4%, as 11% operating revenue growth was damped by a 20% increase in total expenses. ASX declared a dividend of AUD 0.10 for the period, down 9% on the prior year.The results were as preliminarily announced in late January. ASX is seeing abnormal cost growth, and we expect this to continue in the near term. It also announced that Managing Director and CEO Helen Lofthouse will step down in May. The stepping down of Lofthouse follows the scathing interim report by the Australian Securities and Investments Commission in December, which asserted that ASX had given undue prioritisation to shareholder returns at the expense of technology investment.We believe current spending levels are elevated and will normalise when regulatory interest eventually dies down as cost growth has been primarily driven by regulatory costs. Excluding regulatory and inquiry expenses, costs only increased 8%, which was below the increase in revenue.We view ASX as a natural monopoly, given that it provides essential infrastructure to Australia’s capital markets. Despite a deteriorating regulatory environment, we believe the business is well protected by a wide economic moat driven by network effects and intangibles. We also believe the energy transition is an underappreciated tailwind. We expect it to spark demand for resources, particularly in Australia, which has strong natural endowments, to deliver new listings and a long tail of revenue from trading and clearing activity.Healthcare Ramsay Health Care (RHC) ★★★★★ Economic moat: Narrow Fair value estimate: $54 per share Share price: $39.07 (as at 01/04/2026)Uncertainty Rating: Medium Price to fair value: 0.72Owner and operator of hospitals and healthcare services, Ramsay Health Care recently beat ours and the market’s expectations with revenue growth accelerating to 9% in the second quarter. We now expect high revenue growth to persist with the Australian government approving an average premium increase of 4.4% from April versus 3.7% last year. The Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance coverage of the population. According to data from the Australian Prudential Regulation Authority, 46% of the Australian population has PHI, resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 25% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.Nevertheless, Ramsay is delivering strong patient revenue growth, but inflationary pressures, lower government support, and accelerated investment in digital are hampering group profitability. However, we expect margins to expand over the long term as Ramsay uses fewer agency employees, case mix and volume normalise for nonsurgical services, capacity utilisation improves, and digital investment efficiencies are realised. It is important to note that labour shortages are easing, and Ramsay is continuing to invest in recruiting and training. The firm negotiated higher reimbursement rates to meet cost inflation and has deleveraged its balance sheet by selling its share of Ramsay Sime Darby.Industrials Auckland International Airport Ltd AIA ★★★★Economic Moat: WideFair value estimate: $7.90 AUD per shareShare price: $6.66 (as at 01/04/2026)Uncertainty Rating: LowPrice to fair value: 0.84Auckland Airport’s interim underlying net profit was NZD 157 million, 6% higher than last year. The result was driven by more passengers, higher commercial income, and an increase in aeronautical charges.As the primary gateway to New Zealand, Auckland Airport should benefit from rising air travel to the island nation. No other airport in the country is likely to outdo Auckland as an international hub. We expect the airport to capture good medium-term growth from further airline capacity expansion to and from New Zealand. We forecast total passengers handled by Auckland to grow to more than 20% above pre-covid levels over the next decade.A massive project’s capital expenditure bill looms with aeronautical charges also set to drop starting in fiscal 2026, following a regulatory decision. However, we believe the scale of the capital investment plan is reasonable, supported by the airport’s balance sheet. The plan aligns with other global airports and demonstrates appropriate cost rigor. We expect Auckland International to generate a reasonable return on capital investment, given that the proposed airport charges are reasonable relative to those of other airports, both globally and domestically. We believe the market is unjustifiably pricing either lower returns on regulated expenditures or weakness in unregulated businesses, such as retail and car parks. This presents an attractive entry point into a rare, high-quality, essential infrastructure asset.Real Estate Dexus DXS ★★★★★Economic moat: NoneFair value estimate: $9.6 per shareShare price: $5.89 (as at 01/04/2026)Uncertainty Rating: MediumPrice to fair value: 0.61Dexus has ownership interest in, manages, and develops a portfolio of office and industrial assets, about half located in Sydney. The office portfolio contributes nearly two-thirds of group earnings, and industrial assets account for about 15%. The business also manages third-party assets and has a funds management platform with AUD 36 billion in funds under management as of Dec. 31, 2025Earnings saw the company’s first half adjusted funds from operations rose 1% and management announced plans to repurchase up to 10% of its securities over calendar 2026. The result met our expectations, and we are pleased to see Dexus making further headway with asset sales and fulfilling investor redemptions. Buybacks are a sensible use of capital given that Dexus is trading at a steep discount to its underlying asset values. What the market fears is a potential downward spiral involving falling property values and mounting investor withdrawals, with Dexus needing to liquidate assets at unfavourable prices to satiate redemption requests. Its heavy office exposure is another concern.Yet, Dexus has avoided the bear-case scenario the market is assuming. Property valuations have improved in recent months, even for the office sector, which was the worst-hit. The funds platform welcomed new capital inflows in the first half of fiscal 2026, suggesting a rebounding interest in property investments. This should, in turn, support asset values and drive growth in funds under management. Dexus has been actively facilitating secondary transactions on the platform to minimise the net impact on FUM.As leasing conditions improve in key markets, the high-quality office portfolio should benefit from solid rent growth, further underpinning asset valuations. The property portfolio fell almost a quarter in value between fiscal 2023 and 2024, amid the most aggressive rate-tightening cycle in Australia since the 1990s. While potential further rate rises could again shake asset valuations, we don’t picture rapid and substantial devaluations repeating.Technology SiteMinder SDR ★★★★★Economic moat: NarrowFair value estimate: $11 per shareShare price: $3.04 (as at 01/04/2026)Uncertainty Rating: HighPrice to fair value: 0.28SiteMinder is a cloud-based platform engaged in development, sales and marketing for accommodation providers, delivered as a software-as-a-service subscription model. Earnings saw annual recurring revenue (ARR) increase 27% in constant currency, driven by a 14% increase in subscription revenue and a nearly 40% increase in transaction revenue. Despite a softer global travel environment, the company continued to see significant business momentum in transaction revenue from the release of new products. The business also became more efficient with the company’s lifetime value to customer acquisition cost ratio (LTV/CAC), continued to increase to 6.7x, from 6.1x last year, driven primarily by higher average revenue per user and gross margin improvements. Shares rose more than 10% on the news, however, the company still screens as materially undervalued. We think market fears AI will either disrupt SiteMinder’s software, or the businesses of the demand channels it facilitates. Although we acknowledge productivity improvements in AI would lessen the scale advantages that SiteMinder currently enjoys versus competitors, our understanding of these improvements is that they remain limited when viewed across the full software development workflow.Additionally, the business enjoys other advantages from its scale, which seem durable beyond development costs, namely network effects from Channels Plus and the proprietary data it has about its larger customer base, which can be used in room pricing.We view SiteMinder as a well-positioned industry leader with a significant and highly winnable market opportunity. We expect the hotel industry to consolidate around scaled software providers like SiteMinder, which can divide high fixed technological and regulatory costs across a larger customer base. Economic downturns will only accelerate this process, in our view. We expect SiteMinder’s new platform products to increase switching costs and help establish network effects, resulting in significantly higher terminal margins.Utilities Meridian Energy LimitedMEZ★★★★ Economic Moat: NarrowFair value estimate: $5.10 per shareShare price: $ (as at 01/04/2026)Uncertainty Rating: Medium Price to fair value: 0.87Meridian Energy is one of New Zealand’s largest utilities, accounting for a third of New Zealand’s total electricity output. Recent earnings saw first-half fiscal 2026 EBITDA double to NZD 506 million on near-record rain fall, in contrast to very dry conditions in the previous corresponding period. The firm enjoys a competitive position as a result of cost advantages and barriers to entry. Its narrow moat rating is underpinned by its irreplaceable hydroelectric schemes, which are reliable and flexible like gas power stations but are much cheaper to run, have long lives, and emit no carbon dioxide. Meridian has conservative financial leverage (net debt/EBITDA of 1.5) and is well placed to fund its renewable energy and battery development pipeline. Although fiscal 2025 earnings were down due to dry weather, strong earnings growth is expected in the coming years from the normalisation of rainfall, higher retail prices, and the completion of renewable energy and battery developments.It is important to note that individual shares should be considered as part of a well defined investment strategy. For a step-by-step guide to defining your investing strategy, read this article by Mark LaMonica.11 stocks not enough? Sign up for a free trial to Morningstar Investor to see all of our top picks.Get Morningstar insights to your inboxTerms used in this articleStar Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.Uncertainty Rating: Morningstar’s Uncertainty Rating is designed to capture the range of potential outcomes for a company. An investor can think of this as the underlying risk of the business. For higher risk businesses with wider ranges of potential outcomes an investor should consider a larger margin of safety or difference between the estimate of what a share is worth and how much an investor pays. This rating is used to assign the margin of safety required before investing, which in turn explicitly drives our stock star rating system. The Uncertainty Rating is aimed at identifying the confidence we should have in assigning a fair value estimate for a stock. 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