What the Australian share market has in common with three-minute noodles

By ST Wong

The Australian stock market has developed a hunger for any next thing, it doesn’t even need to be a ‘next big thing’, just any next thing to fulfil a short-term craving.

The market’s short-term focus is like basing a diet around three-minute noodles. Three-minute noodles are convenient, they do the job to satisfy your hunger temporarily, but they lack the nutritional make-up to sustain you long-term.

The craving for short-term news is creating good opportunities for stock pickers who take a longer term view.

For example, the immediate reaction to Australia’s borders closing, or re-opening, sees a quick-fire reaction to travel-related stocks such as Flight Centre or Webjet.

Lockdowns have also hampered stocks connected with residential property, due to impacts on short-term listings: REA’s share price fell 10 per cent after reporting due largely to ongoing lockdowns.

Investors are assuming REA will be a COVID loser, but this is a short-term view. Real estate prices globally remain buoyant and interest rates low.

A longer term view suggests REA has a superior real estate listing portal that has become indispensable for property buyers and sellers alike. And it has pricing power. REA is well positioned to continue improving its incremental returns on capital through higher prices.

While short-term success fills a craving, investors need companies which sustain over the long-term. There are good opportunities for stock pickers by targeting those companies which have enhanced their position during COVID-19.

Several quality Australian companies have improved their financial position and are poised to do well as the economy recovers.

For example, regional airline Alliance Aviation has shown the foresight to pick up assets on the cheap, and enhance their standing. At Prime Value, we expect these assets, acquired on depressed prices, to make very profitable returns once deployed.

Similarly, IDP Education recently acquired the British Council’s Indian English language testing business for a great price, improving its position for long-term growth.

Looking past the three minutes noodle cravings takes patience and can test even professional investors. But the rewards are investment choices which are more sustainable and robust, less reactionary, and more resilient to market fluctuations – delivering better performance over time.

ST Wong manages the Prime Value Opportunities Fund: this Fund is open to all investors. To invest in the Prime Value Opportunities Fund, please contact our Client Services Team at info@primevalue.com.au and 61 3 9098 8088.

Related Content

Prime Value Celebrates 27 Years

16 April 2025

Prime Value celebrates 27 years of growth for investors Boutique multi-award-winning investment house, Prime Value Asset Management, has notched up 27 years of delivering investment returns for investors with the Prime Value Growth Fund, which invests in Australian equities, launched during April 1998. Fast forward to 2025 and the manager now offers a suite of […]

CONTINUE READING

Market ‘in flux’ opening opportunities for active small cap managers

10 April 2025

Active managers are well placed to take advantage of a volatile small cap investing environment, where markets are in a state of flux due to uncertainty about everything from tariffs to interest rates, according to Richard Ivers, Portfolio Manager for the Prime Value Emerging Opportunities Fund. He said volatility in reporting season was elevated, with […]

CONTINUE READING

Novotel Cairns Oasis Resort wins Bronze at the 2024 Qantas Australian Tourism Awards

26 March 2025

The Novotel Cairns Oasis Resort, owned by Prime Value Asset Management and Shakespeare Property Group, has been recognised among Australia’s best accommodation providers at the 2024 Qantas Australian Tourism Awards. The Novotel Cairns Oasis Resort was awarded Bronze in the 4-4.5 Star Deluxe Accommodation category at the awards ceremony, considered tourism’s ‘night of nights’, held […]

CONTINUE READING
FIND OUT HOW TO INVEST WITH US

We'll get back to you within 24 hours.

CHAT WITH US