18 Share Tips – 03 June 2019

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Janine Cox, Wealth Within

BUY RECOMMENDATIONS

Seven West Media (SWM)

The media company’s share price is highly volatile. Interestingly, SWM confirmed a support pattern – a dead cat bounce – around 50 cents in April 2019, which represents strong price support for a rise. It’s important to be patient and wait for confirmation, as a strong rise above 59 cents indicates the next rise has started. The shares closed at 52.5 cents on May 30.

Aveo Group (AOG) 

AOG is still a long way from price levels achieved prior to the global financial crisis. But given recent momentum in the share price, the stock has the potential to trade up to between $2.30 and $2.60 in 2019. On the downside, a fall below $1.86 would change my current view. Shares in this retirement village developer and operator finished at $2.05 on May 30.

HOLD RECOMMENDATIONS

Abacus Property Group (ABP)

ABP has continued to rise over the longer term and was recently trading marginally below an important level of resistance around $4. The stock appears strong. While it can potentially rise to $5 in the next 12 months, the price must first break above short term resistance to continue higher. The stock closed at $3.86 on May 30.

QBE Insurance Group (QBE) 

Is now the time to sell QBE? For short term traders, one sell signal recently occurred, so check your exit rules. For investors who have held QBE through all the ups and downs of the past decade, it’s way too late to be asking that question. For the time being, long term support around $9.40 indicates there’s potential for a further rise. The shares closed at $11.78 on May 30.

SELL RECOMMENDATIONS

ALS Limited (ALQ)

There’s major price resistance around $8.40, as indicated by the activity from buyers and sellers over the past few years. In August 2018, the share price traded up strongly above this level before it reversed and fell by around 32 per cent. The stock also failed to make a sustained break above $8.40 when the price rose to around this level in September 2017, May 2018 and May 2019. In my view, the latest reversal indicates the risk to hold is high. Shares in this analytical and testing services business finished at $7.13 on May 30.

Technology One (TNE)

The market recently dumped this software as a service company over concerns about a slowdown in profit growth for the second half of 2019. The move was a shock to most investors because the company had just announced profit growth of between 8 per cent and 15 per cent above last year’s financial result. The fall in the share price well and truly broke the momentum of the uptrend, which provided a technical sell signal. It’s time to check your exit rules. The shares closed at $7.26 on May 30.

Julia Lee, Bell Direct

BUY RECOMMENDATIONS

Lynas Corporation (LYC)

Lynas is a rare earths miner. Rare earths are a strategic asset because China controls most of the supply. Rare earths are used extensively in technology, such as batteries, smart phones and lasers, among other things. The longer trade tensions persist between the US and China, the better it is for rare earth producers operating outside China, such as Lynas. In the background is a Wesfarmers takeover bid at $2.25 a share, but, in our view, it’s unlikely to be successful at this price. LYC shares were trading at 2.775 on May 30.

Bingo Industries (BIN)

A waste management and processing company. Bingo will be working to integrate its Dial-a-Dump acquisition during the next 18 months. The company has upgraded its West Melbourne recycling centre, which should support margin expansion. A weaker residential property market is partially offset by strong infrastructure spending. But the housing market may improve on the back of possible interest rate cuts and easing of lending standards.

HOLD RECOMMENDATIONS

Telstra (TLS)

While its price premium is being eroded, the dividend still looks attractive in a market pricing in a least two interest rate cuts during the next 12 months. Competition appears to be waning and 5G technology should generate more consumer and business spending going forward.

BHP Group (BHP)

Its iron ore, petroleum, potash, copper and coal businesses are dependent on global growth. BHP has been a great stock, with strong dividend returns over the past five years. Chinese steel production is expected to increase about 4 per cent in 2019, and this is probably close to peak output. At these levels, BHP looks to be fair value.

SELL RECOMMENDATIONS

Galaxy Resources (GXY)

Lithium prices are suffering from an oversupply and, in our view, this is unlikely to change in 2019 as more supply comes on line. Despite rapid demand, global production is growing even faster. Lower prices will continue to weigh on the sentiment and performance of lithium stocks.

Ardent Leisure Group (ALG)

International and domestic passenger growth at Sydney Airport is declining. In our view, this weakness and a softer Australian economy are likely to impact Ardent Leisure’s businesses in Australia. While much of Ardent Leisure’s valuation stems from Main Event, we believe weakness in theme parks is likely to continue pressuring the share price. Potential upside risk comes from a takeover, or Main Event outperforming expectations.

Richard Morrow, Baillieu Limited

BUY RECOMMENDATIONS

Liontown Resources (LTR)

Battery metals are regaining the market’s attention. Recent drilling by Liontown at its Kathleen Valley Lithium project near Kalgoorlie in Western Australia has delivered intercepts of high grades and substantial widths. Exploration is continuing at Kathleen and further south at the exciting Buldania lithium project. The shares recently soared to a 52 week high of 12 cents. LTR closed at 11 cents on May 30.

Lefroy Exploration (LEX)

Lefroy’s Lucky Strike gold project is located 35 km from the gold camp and mill at St Ives near Kambalda in Western Australia. Drilling at this renowned gold mining region is coming up, and significant gold grades and intersections have encouraged Lefroy to seek out extensions of existing mineralisation. The shares closed at 18.5 cents on May 30.

HOLD RECOMMENDATIONS

MOD Resources (MOD)

The copper price has fallen from recent highs and painted a bleaker outlook for emerging producers. MOD’s development plans in Botswana haven’t been released, but the metal is still in the ground. Hold for better copper prices.

Metals X (MLX)

A long term plan to increase production and reduce costs at its Nifty copper mine in Western Australia paints a brighter outlook. Tin prices have declined from year highs, but the company has announced strong exploration drilling results at its Renison tin operations in Tasmania.

SELL RECOMMENDATIONS

Oil Search (OSH)

It may be time to consider taking profits in this oil producer. Political turmoil in Papua New Guinea has been impacting the share price. Also, CEO Peter Botten is departing the company after 25 years at the helm.

AGL Energy (AGL)

Australia’s energy market is mired in politics and that creates uncertainty. Political interference can have a potentially negative impact on any company’s pricing and volumes. AGL trades at a premium to our valuation. Consider locking in some profits.

Please note that TheBull.com.au simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of TheBull.com.au. You should seek professional advice before making any investment decisions.