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ask the fund manager
The Motley Fool lets you chat with industry leaders and gain insight into how the experts think. In this issue, Eley Griffiths portfolio her manager Nick Guidera explains why at the moment he has two mining companies and he one tourism business is the best bet.
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Motley Fool: What are the top three stock purchases at the moment?
Nick Gaidera: Monadelfos Group Limited (ASX: MND) — Mining services have fallen into disrepair over the past five years, affected by a global economic slowdown, COVID-19, labor shortages, pervasive cost increases, and a power that is dictated squarely by mining workers. I believe I was put in a position. As such, we’ve seen consolidation between players, and many companies have gone bankrupt.
Monadelphous is considered one of the quality Tier 1 contractors regularly used by major miners. BHP Group Co., Ltd. (ASX: BHP) and Rio Tinto Limited (ASX: RIO) will build new mines and infrastructure and maintain some of its existing plants. Commodity prices remained strong through the end of 2022, fueled by a weakening US dollar and hopes of a resumption of Chinese demand. Rising commodity prices are motivating miners to undertake new capital projects to increase or replace production. As one of the leading engineering firms, Monadelphous is well-positioned to profit from a ton of new work in a more streamlined operating environment.
Iron ore prices have risen from late-2022 lows below USD 80 to a seven-month high of USD 127/ton a few days ago. Commodity traders expect China’s reopening to follow a similar path to previous stimulus packages, with a focus on real estate and infrastructure, ultimately requiring demand for steel and boosting iron ore.
China’s reopening is expected to be choppy, but the outlook beyond [lunar] While the new year remains uncertain, we remain positive about the outlook for commodities and China’s iron ore final demand for 2023.
Rising iron ore prices mean increased earnings and cash flow for iron ore miners. One notable small-cap pure play is Champion Iron Co., Ltd. (ASX: CIA). A low-cost operator producing premium products with a growing production profile. [it’s] You can benefit from higher prices.
the third choice is Tourism Holdings Co., Ltd. (ASX:THL).
With travel resuming and generations keen to explore new destinations, ‘van life’ is back in vogue. New Zealand RV [recreational vehicle] Manufacturer, rental and retailer Tourism Holdings recently Apollo Tourism & Leisure The new business was listed on the ASX for the first time while maintaining its existing listing on the NZX.
The merger brings together the two largest RV rental companies in Australia and New Zealand. The combined business owns and operates everything from a modest van to a six-berth driving hotel.
it has [a] A global footprint operating in North America and Europe, local manufacturing to produce the best products for local markets, and a retail footprint to dispose of end-of-life vehicles.
Any merger has risks. However, there is also a potential benefit, as consolidating the businesses will give him regular cash synergies of $27 million to $31 million. Today, tourism is seen as a non-discretionary expense for many, so more affordable campervan options should be a good fit for consumers to benefit from reduced prices.