Company Interview / Henry's Strait talk stock opportunities

Key points:

Jennings sees ongoing geopolitical risk and the Strait of Hormuz as central to near-term market direction Defensive names such as WOW, COL, TLS, TCL, WES and CBA attract buying, while NAB lags on higher provisions Zip Co (ASX:ZIP) is viewed as undervalued with improving bad debts and strong short-covering potential NextDC (ASX:NXT) showcases intense capital needs, while SXE is positioned as a key beneficiary of data centre build-outs

Heightened geopolitical tension and choppy trading conditions frame Henry Jennings’ current market view, with the Strait of Hormuz seen as the key swing factor for risk sentiment. Jennings notes local equities prove relatively resilient despite weaker US futures, with a modestly positive ASX session reflecting a tilt towards defensives such as Woolworths (ASX:WOW), Coles (ASX:COL), Telstra (ASX:TLS), Transurban (ASX:TCL), Wesfarmers (ASX:WES) and Commonwealth Bank (ASX:CBA). He points to National Australia Bank (ASX:NAB) as the major large-cap laggard after additional provisioning, and expects ANZ Group (ASX:ANZ), Westpac (ASX:WBC) and CBA to follow a similar path.

Jennings highlights buy-now-pay-later group Zip Co (ASX:ZIP) as a standout, reiterating it as his 2024 stock pick from around 40 cents. He states Friday’s results beat expectations on bad debts and sees the stock as cheap against US peers such as Affirm and Klarna. Strong broker upgrades, heavy short interest and rapid credit risk recognition are, in his view, supporting a potential move towards $3, assuming no major escalation in the Gulf.

On data centres, Jennings cites NextDC (ASX:NXT) as emblematic of the capital intensity of the theme, following hybrid and equity raisings totalling roughly $2.5 billion. He argues the real structural winners lie in contractors like Southern Cross Electrical Engineering (ASX:SXE), benefiting from high-value electrical fit-outs across expanding data centre infrastructure.