CHRIS BURRELL ’ S BLOG
In recent months , we have seen the continuation of Australian infrastructure spending together with home building . Some infrastructure stocks in the construction area are good value . As a general comment , Burrell research is more favorably disposed to overseas infrastructure . Australian infrastructure in the main has become highly geared . However , this has not stopped Sydney Airports receiving a bid from the superannuation industry in recent days even though the debt to debt + equity is over 90 %. The offer by Seven Group Holdings for Boral also reflects an interest in the infrastructure sector .
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Agriculture and the Weather
The breaking of the drought at the beginning of 2020 was a theme pre-COVID . The demand for supermarket and home cooking during COVID supplemented the demand at the same time as supply increased with good follow up rains in many parts of Australia . The healthy living theme including the Mediterranean diet and the substitution of cheaper protein for beef e . g . chicken has also played out well in the past 18 months . There has also been some corporate action within the sector including the spinout of the United Malt Group from Grain Corp . United Malt has a leading business in Australia in supplying malt for beer , but what is less known is that they are number 3 in the USA . The reopening of restaurants and pubs in the Western world will help restore the demand for malt and hops .
Summary
In summary , the June 2021 Financial Year showed stellar returns , recovering all of the COVID losses in the previous financial year . Different companies and industry sectors recovered at different rates , with quite a number yet to fully recover . There remain good opportunities both in Australia and overseas in equities , particularly value stocks and those showing growth at reasonable prices . These parts of the market are likely to outperform fixed interest over the next financial year .
There are a number of warning signs , particularly internationally showing some bubble effects in some of the populist internet and technology stocks . These warning signs require caution , particularly in basing investments on independent research and insights , rather than momentum and sentiment .
Chris Burrell Managing Director
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