Macquarie’s top share picks for the next phase of the recovery

And while state border closures remain the centre of a partisan-political storm, Macquarie expects SeaLink to be one of the stocks to perform when they are eventually dismantled.

While the company’s commuter travel exposure has seen it significantly outperform leisure travel providers since the market low in March, the return of interstate tourism is seen as one of a number of factors expected to support SeaLink’s share price over the coming year.

The company’s shares closed at $5.03 on Monday, up 0.6 per cent.

Macquarie also named shipbuilder Austal as a top pick, citing the fact that its share price continues to trade at a material discount to where it was before the pandemic, despite the low impact on its revenues.

Macquarie says there are a number of possible developments that could push Austal’s share price higher over the next year.  AP

The stock remains 14.7 per cent below where it started the year after closing 3.3 per cent higher on Monday at $3.26.

“We estimate greater than 85 per cent of consensus FY21 to 22 revenues are contracted,” Macquarie said.

In the core US business “ongoing improvements in operational efficiency combined with higher margin vessels now under construction creates significant upside risk to consensus FY21 earnings before interest and tax estimate of $128 million.”

The assumptions that inform Macquarie’s assessment of the recovery include ongoing support for shares from historically low interest rates, that weigh on the potential returns from other asset classes and have pushed investors into equities because “there is no alternative”, or TINA.

“While high valuations and the fiscal cliff [as JobKeeper is cut] are risks, we suggested the TINA trade is likely to continue with central banks likely to

remain accommodative as they continue to support the recovery,” Macquarie said.

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