Peter Day, Sequoia Wealth Management
BUY RECOMMENDATIONS
Kogan.com (KGN)
Chart: Share price over the year
The online retailer recently completed an institutional placement and raised $100 million at $11.45 a share. Retail shareholders on the record at June 9 can participate in the share purchase plan and apply for up to $30,000 of shares at $11.45 each. Shareholders need to take into account their personal circumstances before applying and seek independent professional advice. We like the company as it continues to bring well known brands to its platform. We expect the company to continue growing as more consumers switch to online shopping across the board. Kogan shares have risen from a 52 week low of $3.45 on March 13 to close at $13.23 on June 11.
Audinate Group (AD8)
Chart: Share price over the year
AD8 is a global provider of digital audio networking technologies. The company’s platform distributes digital audio signals over computer networks. Its technology solutions are designed to bring the benefits of IT networking to the professional audio visual industry. AD8 is strong. It has no debt and cash flows are robust. It benefits from multiple products and revenue streams. The shares offer good long term value, in our view.
HOLD RECOMMENDATIONS
Freedom Foods Group (FNP)
Chart: Share price over the year
The impact from COVID-19 issues and one off charges are expected to cut full year earnings. However, we’re still forecasting earnings growth, but at a reduced level for fiscal year 2020. Consider holding for the longer term, as the food company should continue to grow in a post COVID-19 world.
GWA Group (GWA)
Chart: Share price over the year
Supplies bathroom and kitchen products to households and businesses. Federal Government grants for Australians building new homes or undertaking renovations will benefit GWA. Longer term, we expect the company will also benefit in line with an economic recovery.
SELL RECOMMENDATIONS
Motorcycle Holdings (MTO)
Chart: Share price over the year
The company expects an impairment charge of between $22 million and $28 million for the year ending June 30, 2020. The non-cash impairment relates to the carrying value of the wholesale segment’s intangible assets. A sales recovery may take time given motorcycles can be considered a discretionary purchase.
Myer Holdings (MYR)
Chart: Share price over the year
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The department store chain has re-opened physical stores following closure due to the Coronavirus. However, the company has struggled for years and continues to face stiffer competition from leaner online retailers. Myer is also up against cautious spending consumers in a slowing economy. Prefer others.
Michael Gable, Fairmont Equities
BUY RECOMMENDATIONS
Virgin Money UK PLC (VUK)
Chart: Share price over the year
Shares in this UK bank have found good buying support since mid May. We expect the recent uptrend to continue and recover much of share price falls that occurred in March. In our view, VUK is an attractive risk/reward proposition. The shares have risen from $1.345 on May 15 to close at $1.90 on June 11.
Sydney Airport (SYD)
Chart: Share price over the year
We believe stocks directly linked to the re-opening of the economy will do well. The chart shows recent good buying support for SYD. A recent break above resistance near $6 should lead to the rally continuing higher from here. The shares have risen from $5.92 on May 25 to finish at $6.62 on June 11.
HOLD RECOMMENDATIONS
James Hardie Industries PLC (JHX)
Chart: Share price over the year
This building products company has rallied strongly since we recommended it as a buy on TheBull.com.au on May 18. The stock finished at $21.54 on Friday, May 15. The stock has responded to the economy opening up more rapidly than expected. There’s no indication the uptrend is faltering. The stock closed at $26.53 on June 11.
Harvey Norman (HVN)
Chart: Share price over the year
We recommended this retail giant as a buy on TheBull.com.au on May 18. The shares were priced at $2.83 on Friday, May 15. We remain more optimistic about the company’s outlook as more people return to work in response to restrictions easing across Australia. We expect the shares to continue rallying after breaking above resistance near $3. We expect HVN to re-test $4. The shares closed at $3.69 on June 11.
SELL RECOMMENDATIONS
Costa Group Holdings (CGC)
Chart: Share price over the year
Shares in this horticultural company rose from $2.50 on March 23 to $3.30 on May 28. However, according to our technical analysis, we expect the shares to continue drifting from here. The shares closed at $3 on June 11. Growth stocks trading at substantial discounts appeal more to investors in this environment.
Woolworths (WOW)
Chart: Share price over the year
In our view, shares in the supermarket giant appear fully valued. We believe the shares offer limited capital growth from here. Investors may want to consider selling some WOW shares and investing the proceeds in under valued growth stocks punished during the pandemic. WOW shares closed at $36.81 on June 11.
Tony Paterno, Ord Minnett
BUY RECOMMENDATIONS
James Hardie Industries PLC (JHX)
Chart: Share price over the year
We believe this building products maker is one of the best quality companies in our coverage, with a proven track record of share gains and industry leading returns. While the near term outlook for market demand is weak and uncertain, lower input costs – notably pulp and freight – should help margins. We expect the company to increase market share in all regions, while retaining strong margins in this weak environment. The company’s solid balance sheet and ample credit liquidity will help it navigate uncertain times.
Nine Entertainment Co. Holdings (NEC)
Chart: Share price over the year
We believe management has successfully diversified its revenue base away from free-to-air TV into new digital growth areas with significant potential upside. The business is now less susceptible to the structural and cyclical headwinds of TV ad spending. Streaming company Stan is profitable and property website Domain is emerging from one of the worst real estate listings environment in many years. After acquiring the rest of Macquarie Media, we expect revenue and cost upside to accompany cross-selling opportunities from Nine’s full suite of media assets.
HOLD RECOMMENDATIONS
Coca-Cola Amatil (CCL)
Chart: Share price over the year
Group volumes significantly declined in April and for the first three weeks of May due to the impact from the Coronavirus. The beverage maker is a play on a recovery in Australia and New Zealand. Recently, share price momentum has been favourable, with the stock rising from $8.70 on June 1 to finish at $9.27 on June 11.
Scentre Group (SCG)
Chart: Share price over the year
Owns a huge portfolio of shopping centres. SCG may take a patient approach, as it doesn’t need to raise equity. It has ample liquidity and plenty of covenant headroom. SCG was recently trading close to our target price, which caters for any potential dilutive measures. An increasing number of people returning to shopping centres as restrictions ease will assist the retail industry across the board.
SELL RECOMMENDATIONS
Wesfarmers (WES)
Chart: Share price over the year
The company is closing or converting more than half its Target retail network to Kmart. Wesfarmers will incur restructuring costs and provisions in Kmart Group of between $120 million and $170 million. It will also incur conversion costs of between $120 million and $130 million. We believe WES is facing challenges in fiscal year 2021, as we expect earnings growth to slow across several divisions.
Evolution Mining (EVN)
Chart: Share price over the year
The gold miner has agreed to sell its Cracow mine in Queensland to Aeris Resources for up to $125 million. Our mine valuation was $166 million. Our fiscal year 2021 earnings forecast has fallen by 12 per cent. We retain our sell recommendation based on valuation. The shares have risen from a 52 week low of $3.285 on March 16 to close at $5.52 on June 11.
The above recommendations are general advice and don’t take into account any individual’s objectives, financial situation or needs. Investors are advised to seek their own professional advice before investing.
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.
