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AMP has not been in the news much lately, despite a change of CEO’s. This means a very effective hand-over of leadership. The Australian had an article on the transition and some noteworthy points from the interview with the new CEO, Craig Dunn, were:
- He aims to give AMP a "stronger growth flavour" but says that any change will be "evolutionary, rather than revolutionary". Though he also stated, " "We do see opportunities to grow the company and to drive the AMP business harder."
- In the wake of the Labor Party’s election victory he said there were "some things at the margin where (we) could have some more change". Withholding tax, which prime minister-elect Kevin Rudd had plans to reduce, was one area he believed could be in for change. Mr Dunn said withholding tax and some of the ways the industry was taxed created barriers for developing the financial services industry overseas.
- On the US sub-prime crunch, Mr Dunn believed there would be further volatility in the market over the next 12 months. However AMP should have no direct impact apart from their investment holdings.
- Mr Dunn emphasized that there was no shortage of opportunities for AMP but said its continued success would depend on management making the "right strategic choices, in terms of where we invest for growth".
- Within AMP Financial Services, he said there were many opportunities to expand the business, adding that there was substantial scope to improve planner productivity and numbers. He said the main opportunities with AMP Capital would be in the creation of "higher value end products", particularly in the property and infrastructure sectors.
- Expansion into Asia would remain an "ongoing priority " for its asset management business.
- AMP expected the pension market to grow at double the rate of the broad superannuation market.
Nothing drastic from his comments. It is comforting to have a company with a steady as she goes approach in volatile market periods. I think balanced stocks (which have characteristics of growth and defensive stocks) are going to provide the best returns in times like this. AMP will be a beneficiary from our aging populations financial needs. It has a premier brand when it comes to wealth management and has direct positive exposure to the rapid growth in Superannuation investments. You should look to buy when the stock goes under $10.
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Another good stock to look into for the longer term is Macquarie Airports (MAP). It reported strong October traffic data and should benefit in the longer term from the growth in air travel around the world. Recent share price weakness has provided some good buying opportunities. The potential for capital management initiatives (eg stock buy-back and increasing dividends) should also provide some upside. My target for the stock is $4.30 by year end, moving to $5.00 by mid next year. It also has an excellent 6% dividend yield. Brokers also rate the stock a buy.
With both stocks, there is no rush to get it. So do your research before you make any decisions.
Disclosure : Through direct and managed fund holdings I have an interest in both stocks.
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