Your investment options
At Craigs we provide you with the flexibility to build a portfolio of investments from our list of investment options.
We have over 240 investment options available for you to invest in. Our investment options include a range of equity, fixed interest, investment trusts, NZ managed funds, index funds and listed property trust investments, available on local and international listed and unlisted markets.
If you would like to review and make changes to your portfolio please contact your Craigs investment adviser or our Client Services team.
Read our research insights on three of our current investment options below.
Contact Energy Limited
CEN.NZX | Utilities
Our Classification: Core
Risk indicator: 6/7
Sustainability score: 4.6/5
About Contact Energy
Contact Energy is one of New Zealand’s largest electricity retailers, with more than 400,000 customers. The company is also a sizeable electricity generator, producing over 20% of New Zealand’s electricity from hydro, geothermal and gas-fired power stations.
What makes Contact Energy different?
CEN’s broadband offering is starting to generate solid traction, with a strong uplift in customers throughout recent years. Although the business segment is not large enough to materially shift total earnings, CEN’s broadband package bundled with electricity supply offers an attractive, simplified package. This bundle means that its customers are less likely to switch given the ease of having two core services with one provider and, in time, should continue to decrease customer churn as the offer gains momentum. CEN’s bundling of broadband with electricity and gas is proving attractive to customers.
Opportunities and threats
CEN management has made it clear it intends to move away from thermal generation over time. Following the construction (and completion) of the Tauhara geothermal project, CEN will be close to completing its multi-decade strategy to substitute thermal generation with renewable. There is an expectation that CEN will ultimately retire some of its existing thermal capacity to make room for the eventual supply of hydro electricity from the South Island. However, the transition towards 100% renewable generation for New Zealand requires security of supply along the way.
Our view and outlook
Based on an energy sector poised for greater electrification (both transport and process heat), an already tight electricity supply demand balance through the 2020s, and CEN’s portfolio transition away from high-cost thermal, it makes a solid investment proposition. Having rebased its dividend, CEN now provides reasonable income certainty, along with future earnings growth potential as development projects come on stream.
Cochlear Limited
COH.ASX | Healthcare
Our Classification: Core
Risk indicator: 6/7
Sustainability score: 4.5/5
About Cochlear
Cochlear is the leading global manufacturer of cochlear implants, a device used to restore hearing for patients with severe to profound sensorineural hearing loss (hearing loss in which the inner ear is not functioning properly). The company also makes bone anchored hearing aids for patients with less severe forms of hearing loss. 70% of all cochlear implants have been manufactured by COH.
What makes Cochlear different?
For sensorineural hearing loss, cochlear implants are a much more effective treatment option than a hearing aid. A cochlear implant essentially converts sound into an electric signal that is transmitted directly to the inner ear (cochlea), bypassing the part of the ear that isn’t functioning properly, where it is then interpreted by the brain as sound.
Cochlear has technology, brand and history. Its globally installed base also provides the opportunity for growing revenue from sound processor upgrades and accessories. Cochlear implants are not compatible with non-Cochlear sound processors.
Opportunities and threats
COH estimates that its addressable market is less than 5% penetrated and that more than 15 million people globally could benefit from a cochlear implant or a bone anchored hearing aid. With the children segment relatively mature (80% penetrated in developed markets), COH is currently targeting the adults and seniors segment which it estimates is less than 3% penetrated in developed markets. COH is focusing its efforts on building awareness in this channel to increase penetration. This includes direct to consumer marketing and working with the hearing aid channel to build a clear referral pathway for adult patients. COH is also working with various groups (surgeons and audiologists) to develop a standard of care that ensures a more consistent diagnosis and treatment of severe to profound hearing loss.
Once a patient has been implanted with a cochlear implant, the external sound processor is typically upgraded every five years when the useful life ends, or as next generation technology becomes available. This sound processor upgrade cycle is attractive as it creates a stream of recurring revenue for COH at a relatively high margin. Services account for approximately a third of total revenue.
Our view and outlook
COH is a high-quality company, as evidenced by its track record of growth and its strong return on invested capital. As a result, its shares are rarely cheap. COH has structurally underpenetrated end markets and we remain confident in the long-term earnings path and suggest adding to shares on weakness.
Microsoft Corporation
MSFT.NASDAQ | Technology
Our Classification: Core
Risk indicator: 6/7
Sustainability score: 4.9/5
About Microsoft Corporation
Microsoft is a leading maker of enterprise and consumer software products and is well known for its Windows operating system and Office productivity suite.
What makes Microsoft Corporation different?
MSFT offers operating system software for computing devices, servers, phones and other devices. The company is organised into three similarly sized segments. Firstly, productivity and business processes which includes legacy Microsoft Office, cloud-based Office 365, Microsoft Exchange, Skype, LinkedIn and Microsoft Dynamics. Intelligence cloud includes its important infrastructure and platform-as-a-service offerings, Azure and Windows Server OS, while the more personal computing segment includes Xbox, Bing search, display advertising, Surface laptops, tablets and desktops and all other gaming activities.
Opportunities and threats
One of MSFT’s biggest advantages is its ability to leverage its massive base of enterprise clients. Consulting and business partners, who sell MSFT’s cloud services to their client base, have found that existing MSFT customers have more interest in Microsoft Azure because of their long-term relationship with the company. Given that customers already use MSFT software, the shift to Azure is much easier. MSFT will then be able to upsell these customers new premium Azure hosted services, including its new generative AI capabilities that can be up and running with a few clicks.
MSFT’s other edge over competitors is that it’s already a major software-as-a-service vendor which includes Dynamics, Office 365 and LinkedIn. MSFT also has a first mover advantage in generative AI in its collaboration with ChatGPT, which should be an important platform for generating more advertising revenue, driving new customer wins and increasing prices.
Our view and outlook
MSFT is a high-quality, innovative company with sustainable advantages, primarily through the high switching costs associated with most of its products and the close integration and widespread use of its various businesses, which create a strong network for MSFT products. MSFT’s earnings growth prospects remain strong, driven by the powerful megatrend of a continuing shift to the cloud and the positive margin benefits as Azure continues to scale. Growth in cloud will continue to be supported by transitioning the company’s large base of Office and Windows customers to its cloud platforms. The significant boost from corporates urgently shifting more of their IT infrastructure to cloud due to the COVID-19 pandemic cannot be understated, especially now with generative AI.
MSFT is a highly profitable company and a cash machine, generating over US$30bn in free cash flow per annum, which management has wisely reinvested back into the business, returned to shareholders or selectively used to acquire strategic businesses. We view MSFT as a must own stock within global equity portfolios.
About risk indicators and sustainability scores
Risk indicators are assessed by Craigs Private Wealth Research team and are rated from 1 (low) to 7 (high). The rating reflects how much the value of the company goes up and down (volatility). A higher risk generally means there is the potential for higher returns over time, but with the risk of higher losses, and there are likely to be more ups and downs along the way. To help you clarify your own attitude to risk, work out your risk profile at craigsip.com/risk-profiler or speak to your Investment Adviser.
Sustainability scores are assessed by Craigs Private Wealth Research sustainability team and are calculated as an average rating out of five for environmental, social and governance factors. An N/A sustainability score means a sustainability assessment has not been made. For further information on how we calculate these scores, please refer to this report or speak to your Investment Adviser.