Company Interview / Ray's 'value' stock pick

Raymond Chan from Morgans highlights that the ASX 200 remains at record highs, trading at a price-to-earnings ratio of 18.8 times, a 14% premium to its historical average. Chan points out that market fundamentals still show earnings growth for the ASX 200, with forecasts of 5% for FY26 and 8% for FY27, but warns these projections typically fade over time. He notes the upcoming reporting season will be crucial, as investors weigh persistent risks against existing opportunities.

Chan focuses on identifying quality stocks within the ASX 100, prioritising liquidity and robust research coverage. He singles out Amcor (ASX:AMC) as particularly interesting after recent underperformance following a large acquisition in November 2024. According to Chan, Amcor’s (ASX:AMC) forward PE ratio of 11 times is notably lower than the market average, and its projected yield of 6.2% stands out amid easing cash rates. Chan states that Amcor's history of integrating major acquisitions and extracting synergy supports a positive outlook despite recent share price weakness.

Amcor’s (ASX:AMC) $650 million US cost synergy target from the Berry acquisition and a product mix shift towards healthcare, pet food, and beauty packaging are considered complementary and supportive of future growth. Chan sets a price target of $16 for Amcor (ASX:AMC), citing a total projected return above 10% as appealing to investors willing to assume the associated risks.