Stock market volatility: Is this large-cap worth a closer look?

Stock market volatility: Is this large-cap worth a closer look?

Article image

Shares in Charter Hall (ASX:CHC) are currently trading at A$16.3 but a key question for investors is how much a prolonged spell of economic uncertainty will impact the price.

The answer comes down to judging whether Charter Hall is well placed to ride out economic shocks. To do that, you have to look at its profile to see where its strengths lie.  

The promising news is that it shows signs of scoring well against some important financial and technical measures. In particular, it has areas of exposure to two influential drivers of investment returns: high quality and strong momentum.

Here is why that's important...

Why quality stocks pay off

When it comes to stock analysis, company quality tends to show up in high profitability and strong industry-leading margins. These kinds of firms are stable, growing and often have accelerating sales and earnings. They also have strong and improving financial histories with no signs of accountancy or bankruptcy risk.

One of the interesting quality metrics for Charter Hall is its 5-year Return on Capital Employed, which is 15.7%. Good, double-digit ROCEs can be a pointer to companies that can grow very profitably.

Harnessing the power of momentum

Positive momentum trends show up in share prices and earnings growth. You can find the clues in stocks that are trading close to their 52 week high prices and outperforming the market. They’ll often be beating broker estimates and getting forecast upgrades and recommendation changes.

This appears to be true at Charter Hall, where the share price has seen a 25.6% return relative to the market over the past 12 months. Market volatility and economic uncertainty can be a major drag on momentum, but previously strong stocks can be quick to recover when confidence returns.

In summary, good quality and momentum are pointers to some of the best stocks on the strongest uptrends. This combination of factors can be a clue to finding shares that can deliver solid investment profits over many years.

In good times, these shares can become expensive to buy. But in volatile markets, there may be chances to buy them at cheaper prices.


Intrigued? 

You should be. The screen that has helped unearth the stock idea detailed in this article is just one of the many tools available at Stockopedia that can help make you a better investor. 

Powered by years of research and huge volumes of data analysis which are normally not available to private investors, we have developed the tools that will give you a better chance of beating the market. 

What are you waiting for. Click here to sign up to your free trial today. 


About us

Stockopedia helps individual investors make confident, profitable choices in the stock market. Our StockRank and factor investing toolbox unlocks institutional-quality insights into thousands of global stocks. Voted “Best Investment Research Tools” and “Best Research Service” at the 2021 UK Investor Magazine awards.

Charter Hall's StockRank™

Super StockBalanced

Charter Hall's StockRank™

With a StockRank of 83, Charter Hall is more attractive than 83% of the 2,025 stocks we cover in Australasia, according to our proprietary ranking system.

See the full StockReport

Absolutely Perfect

"Trialed multiple other platforms - this is by far my favourite. Other platforms do not even have half the stuff that you can find on Stockopedia. Love it!"

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.