Strategy View

Posted on by Randy Watts

Key Points:

Four global investment themes currently in favor:

 

  1. China Education – Private education revenues set to rise by ~50% over next four years, according to Frost & Sullivan.
    1. Top Ideas are

      Education (

      ) – aggressive entry above $38; and China Maple Leaf Education ( MAPZ.HK) – extended, hold shares

  2. Indian Financials – For FY18, five Focus List names generated average loan growth of 25%, average EPS growth of 25%, average ROE of 22%, and gross NPA of less than 1.3%.
    1. Top Ideas are Kotak Mahindra Bank ( KOK.IN; KMB IN) – 8% above pivot, hold shares; Indiabulls Housing Finance ( IEZ.IN; IHFL IN) – consolidating; GRUH Finance ( GRU.IN; GRFS IN) – testing all-time highs, hold shares
  3. China Clean Energy – Natural gas, wind, solar, hydroelectric, and biomass rose to 20.8% of the total energy consumption in 2017, from 19.6% in 2016. Wind and solar capacity rose by 11% and 69%, y/y, respectively. The government also began a push to convert 4M households from coal to natural gas.
    1. Top picks are China Gas ( IWAI.HK; 384:HK) – actionable; and ENN Energy ( XINA.HK; 2688:HK) – extended, hold shares
  4. U.S. Crude Production Growth – Production to average 10.7 M/bpd for the full-year, before rising to 11.4 M/bpd on average in 2019, from 9.3 M/bpd in 2017. Despite supply growth, crude prices remain at three-year highs, driven by continued OPEC cuts, Iran tensions, solid demand growth.
    1. Top picks are Diamondback Energy ( FANG) – actionable; Wildhorse Resources ( WRD) – 29% above 50-DMA, trim but hold core position; Continental Resources ( CLR) – bounce off 21-DMA support, hold shares