MARKETS SPECTATOR: Inside Macquarie's big top

Macquarie has added a number of big ASX names to its 'high conviction portfolio', and taken profits on another.

Macquarie Group has made some changes to its ‘Macquarie Marquee Ideas’ high conviction portfolio. In the large cap space, it's adding ANZ Bank, CSL, Oil Search, BlueScope Steel and Spark Infrastructure Group as buy ideas.

"ANZ is our preferred bank exposure as it is currently trading on the lowest price to earnings multiple of the majors at 12.5 times (MRE forecasts) and lowest price to net tangible assets at 2.1 times, relative to majors, yet has the Asian growth angle and is showing progress on cost-outs”, Macquarie said in the report.

For Bluescope Steel, the broker believes the company should achieve wins in some or all of the anti-dumping and subsidisation claims that it is pursuing, which will be supportive of a continued earnings recovery in its coated and industrial products division in fiscal 2014, even in the absence of a weakening Australian dollar or a substantial pick-up in domestic Australian residential or manufacturing demand.  

In relation to Oil Search, Macquarie believes there is no other stock in the sector that can match its rich vein of catalysts and medium-term production growth. It notes that the stock is trading in line with its core net asset value, which Macquarie sees as a good entry point given its low-risk upside from greater clarity around the Taza discovery, the ongoing near field appraisal program and the growing potential for a third and fourth train in due course.

On the sell side, the team has decided to take profits on REA Group given its recent share price strength. With 47.5 per cent of out performance since September 4, 2012, it is the best ever performing idea since Macquarie Marquee Ideas was launched three years ago.

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