Company Interview / Strike gold & energise your portfolio with these stocks

Key takeaways:

Investor sentiment varies amidst economic volatility and RBA assessmentsDeclining demand from China impacts Australia's materials and mining sectorsGrowth in renewable energy and critical elements presents new investment opportunities

Mark Elzayed from Investor Pulse shares insights on current market conditions, highlighting mixed investor sentiment amidst global volatility. He notes the RBA's role in assessing economic data, including sluggish GDP growth and underwhelming flash PMI numbers, emphasising the impact on local markets.

Mark points out the materials and mining sectors in Australia, affected by decreasing demand from China, especially in iron ore prices. He mentions Fortescue’s (ASX: FMG) support levels and the growth potential in software service products from companies like Nuix (ASX: NXL) and Xero (ASX: XRO), particularly in North America and the UK.

He also discusses the renewable energy sector, highlighting Origin Energy’s (ASX: ORG) investment in hydrogen plants and the broader shift towards renewable infrastructure. Additionally, Mark comments on portfolio rebalancing towards critical elements and gold, with companies like Sapphire Resources and Evolution Mining (ASX: EVN) being favourable investments.

Full unedited transcript below:

0:00

It's, uh, get across, uh, what to look at, certainly on the local market. Mark Azalea joins us from Investor Pulse. Mark welcome, Andrew. It's a pleasure to be here. Yeah great. Your first time on the show. So terrific to have you here. Let's first take a look at the broader picture of what we're seeing. Obviously in the wake of the fed cutting. There's the excitement that's buoyed global markets. Uh, even though locally of course the RBA looking as though it's not going to cut for any anytime soon. Um, how do you view investor sentiment at the moment. So investor sentiment, Andrew certainly is um, uncertain to perhaps somewhat optimistic. You know, there's quite a bit of volatility happening in the markets at the moment, particularly here in Australia with uh, the RBA meeting tomorrow, you know, so, um, the RBA has got a pretty big job to do in terms of, um, uh, assessing the, the data, uh, that, that it has presented in particular the GDP numbers 0.2%, quarter on quarter, 1%, their annualised for the year,

0:59

very sluggish. You know. So investors are certainly looking at, at the uh, at the broader health of the economy. The RBA is also taking a look at the local local health services. The flash PMI numbers came out lower than expected. I think at around that 4847 level, yes. So in contraction, um, well certainly, in fact we saw that with manufacturing and contraction services growth slowing as well. Absolutely. Yeah. You know, and we are seeing that across the manufacturing, uh, space and the materials sector here in Australia. You know, we've got some, some pretty waning, uh, waning demand from our major trading partner there in China. You know, so the RBA certainly taking a look at that, that aspect. Um, and uh, here in Australia, you know, the RBA's taking a look at the unemployment numbers, you know, somewhat stickier than I think. What, what they're anticipating at 4.2%. However, the jobs openings certainly have been, have been loosening. So, you know, we're

1:59

on the right track in terms of um, uh, falling trimmed mean inflation. But I think the RBA perhaps just wants to see a little bit of movement on the unemployment numbers. Perhaps you mentioned China and demand or lack of it, as the case may be, and that is reflected certainly in the iron ore price at the moment. And when we take a look at what's happening this morning, in fact, with the the majors are down again, how are you viewing that that segment at this point? Yeah. Look, it's a really interesting segment. I mean, the

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materials and mining segment, you know, certainly accounts for about 14% of Aussie GDP because of China's weakened domestic demand. That's a certainly being being impacted. You know, 80% of Aussie iron ore, uh, generally heads over to China. And so, you know, we're seeing a lot of weakness, um, particularly on Fortescue, you know, which has essentially strong support levels at around that $14 a share. So our investor pulse for our subscribers, we're taking a look at these emerging emerging markets. You know so we're taking a look at exporting Australian software service products. You know companies like nux and what they're doing in the investigative analytics space. Um, uh, and uh companies also like, like Xero who earlier on in the year raised about $900 million there through unsecured convertible notes. Yeah. In fact, we look at we've just had the share price of both up there. You can see they are heading in the right direction. So you're seeing some

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solid growth ahead for them. Yeah, absolutely. You know we're seeing strong growth in particular for for zero across um, uh, the UK and North American segments and also for a nice and up and coming company like, like Newsweek's,

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um, across North America as, as, as well in securing more government contracts and also across the private sector. So we're really bullish there.

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Um, what about renewables? Are you focus on that because that sort of seems to have gone cold to some degree. Um, I guess given it's all a bit about I this year. Um, are you seeing potential there still? Yeah, absolutely. You know, in taking a look at Chinese domestic demand again and obviously going back to that particular story. Um, you know, the, the GDP, uh, otherwise lost to Chinese demand has to be some somehow made up. You know, that lost ground has got to be clawed back, you know. And so we take a look again at that software service that, that, that, that tech sector as well as also renewable energy. And here in Australia, you know, seven point 7,000,000km² odd, you know, there's no shortage of land. And so therefore kind of, um, the movement away from traditional infrastructure like coal and now more into, uh, renewable energy such as hydrogen, such as uh, offshore wind farms such as solar panels, uh, is a certainly an interesting space to be in particular, um, the export

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of our energy abroad. So not only the development, uh, to our most recent project there with Singapore and just working out a few, uh, kind of issues with the with the Indonesian government there along the way to get that 4000 kilometer length cable there. Uh, so to kick off that, uh, export. Yeah, it's, uh, you know, that's really ambitious, isn't it? Um, so which companies are actually liking in that space at the moment? So, so at the moment we're certainly liking origin energy. Um, we like Origin Energy for a few reasons there as a wholesaler and as a retailer, but also that north of $120 million investment there for the hydrogen plant in the Hunter Valley region. So Origin Energy's displayed some excellent financials and reported really well for the for the year. Revenue growth has been north of 30% EBITDA growth north of 60. And that's, uh, off higher uh, gross margins there on cost as well as also delivering excellent shareholder value in the way of dividends there north of 5.5%. So we're really

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excited for Origin Energy's investment. We've also seen investment just broadly on from Woodside Energy from Fortescue. Unfortunately Fortescue's had that uh had that slump with the iron ore pricing. Um however, Fortescue is also making some significant investment in the in the hydrogen space locally and internationally.

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Mark, if you've already mentioned the materials sector, uh, from a sector point of view though, which as we head towards the end of the year. Which ones are you favoring? Which ones don't you want to be in? That's a really good question. So I guess for us, when it comes to portfolio rebalancing, we've certainly Underweight. More on the iron ore sector. Um, we're taking a look more broadly at producers within the renewable energy, uh, space and, uh, exporting those critical elements such as copper, nickel, uh, cobalt, uh, silver. So, you know, we're taking a look at, um, uh, Sapphire Resources, uh, with the, with the copper emphasis, the ticket code on sapphires, SFR, uh, and has had an excellent play year to date. Um, we're also in the gold space, and our subscribers are enjoying the returns on gold north of 2600 at the moment. Why wouldn't you? Yeah, exactly. You know, so, I mean, you've got a lot of central banks picking up gold there on the demand side, you've got it,

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uh, as an excellent inflationary hedge, um, increasing off the tailwinds of, of the inflation we've seen the last couple of years, certainly from year to date. Yeah. Um, and so Evolution Mining, with its copper production at 70 to 80,000 tonnes, as well as also seven, 107, 50,000oz of gold, is an excellent space to be in taking advantage of both the gold rally and also the copper that we'll see moving moving forward.