Top fund manager names this iconic company as “the cheapest stock in the ASX 100”

5254
ASX 100

Earlier this week some of the country’s top fund managers presented stock ideas at the Future Generation Investment Forum.

Philip King of Regal Funds Management named Qantas Airways Limited (ASX:QAN) as his top stock pick.

According to a summary of the forum posted on the Future Generation website, Mr King said Qantas trades on a price to earnings ratio (P/E) of just 9 times, yet revenues and earnings are growing strongly making Qantas “the cheapest stock in the ASX 100.”

Mr King said the Qantas share price could easily go up 50 per cent.

Much of the company’s earnings comes from three jewels in the crown — its domestic airline, Jetstar and the Qantas Frequent Flyer program. The international airline is not as significant to the overall Qantas business.

Mr King identified three catalysts to help push the share price higher in the coming 6 months.

  1. Results in August could beat expectations, forcing analysts to increase their share price target for Qantas shares.
  2. The reinstatement of a consistent fully franked dividend yield. Mr King said the dividend could be up to 40 cents. With the Qantas share price currently trading at $6.34, that would translate to a fully franked dividend yield of 6.3 per cent. Such an attractive dividend yield would bring back Australian shareholders.
  3. Last November, Qantas was deleted from the MSCI index because it had too many foreign shareholders. With the potential return of Australian shareholders to the register, it could lead to Qantas being reinstated to the MSCI index. This alone could drive a 30 per cent gain for the Qantas share price.

The Qantas share price has jumped 262 per cent higher over the past 5 years, the 3rd best ASX 100 performer over that period. Only Northern Star Resources Ltd (ASX:NST) and Aristocrat Leisure Limited (ASX:ALL) have gained more than Qantas shares.

ASX:QAN

Source: The Capital Club. Qantas share price over last 5 years.

Editor’s note: Qantas is a member of The Capital Club 10, a basket of ASX 200 companies I believe have a good chance of out-performing the S&P/ASX 200 Index over the next 3 years. 

Here’s how you can strike it rich in the share market

The best way to strike it rich in the share market is to buy shares that are not only cheap, but growing quickly.

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Best of all, the report is absolutely free, exclusively for readers of The Capital Club.

In this comprehensive free report, you’ll find the name of one ASX gold stock that’s not only profitable, but trading at less than 4 times forecast profits.

You’ll also discover the name of a company one fund manager has called the cheapest stock in the ASX 100, and you’ll read about the three catalysts that could push the share price higher in the next six months.

Finally, the report names one of the cheapest retailers trading on the ASX, a company that just picked up the assets of a distressed competitor on the cheap, paying just 2 times earnings. No wonder one top fund manager thinks its share price could at least double.

With the share prices of each of these 3 companies having the potential to double or more, you’ll want to act now. Simply click here or the button below, enter your email address, and this free report will be instantly sent to you.

See the 3 stocks

Read Next

Here are 6 of the best dividend stocks on the ASX for 2018 and beyond

Here are 10 ASX 200 shares to beat the traditional blue chips over the next 3 years

5 ASX blue chip shares for 2018 and beyond

Top fund manager names this iconic company as “the cheapest stock in the ASX 100”

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au