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2 quality stock picks from Anton Tagliaferro

Nicholas Grove

Nicholas Grove: I'm Nick Grove with the Morningstar Individual Investor Conference in 2017 and I am joined by Anton Tagliaferro.

Anton, whether or not investors should rush out and buy them at the moment, regardless of that question, what are some of your favorite picks on the ASX at the moment?

Anton Tagliaferro: Well, it is tough at the moment. I think most companies, it's difficult to grow their earnings. Companies we like for the next three to five years, look--we're looking closely at Brambles because it's well out of favour and it's still a very good company we think for the long term.

Another one we like which again we're not expecting a very strong necessarily first half result, but I think in the next three to five years is a company called Pact Group, which is a packaging company. Those sort of companies, which have got steady type of earnings, recurring earnings, strong competitive advantage, pretty good management and will be around for a long time.

Grove: And Anton just as we are entering, the world is entering this phase of quantitative tightening, how important is individual stock selection going to be?

Tagliaferro: That's always important. But look, I guess we are living in an interesting time where we've had, we've got interest rates at record low levels at crisis levels, when the world has moved beyond being in a crisis. So, at some point that has to reverse, interest rates also have to normalise and on top of that, the Fed Reserve which has bought all those bonds to pump money in the system is now talking about reversing that. Although having said that, Europe is still printing money and Japan is still printing money. So that will offset some of the Fed, but look at some point interest rates, the whole balance sheets of central banks have to get back to normal. So, there will be rockier times in the market ahead I am sure.