John Anderson, Bell Potter Securities
Sonic Healthcare (SHL)
This global pathology provider has significant operations in Australia, the US, Europe and New Zealand. We expect demand for pathology services to continue growing in the long term. This well managed group has a strong balance sheet and is likely to focus on potential growth opportunities in existing and new geographical markets. The share price has risen from $30.70 on March 9 to trade at $35.79 on April 30.
Propel Funeral Partners (PFP)
This large funeral provider has a strong presence in Australia’s regional areas and New Zealand. It has an active, yet strategically targeted acquisition pipeline. First half 2021 revenue of $59 million was up 3.5 per cent on the prior corresponding period. In our view, the recent share price offers an attractive entry point. The shares were trading at $3.17 on April 30.
Temple and Webster Group (TPW)
This big online furniture and homewares retailer offers more than 180,000 products from more than 700 suppliers. The company has performed well during the past 12 months under capable management. The shares were priced at $3.81 on April 29, 2020. The shares were trading at $ 10.70 on April 30, 2021. Most of its growth appears to have been priced into the share price.
Netwealth Group (NWL)
NWL customers can access a suite of financial products via the company’s online wealth management platform. The company’s platform provides efficient and transparent services for acquiring, holding and administering investments. While this financial services company is likely to continue taking market share, it’s trading as an expensive growth stock. The shares have risen from $7.31 on May 1, 2020 to trade at $14.94 on April 30, 2021.
Scentre Group (SCG)
This vertically integrated retail property group owns, develops and manages shopping centres in Australia and New Zealand. The company’s assets are widely regarded as best in class. But we expect the COVID-19 impact on shop leases to continue for some time. We expect the share price will remain under pressure.
Nanosonics is a standout Australian company, which developed and commercialised the trophon device to prevent infection in hospitals and clinics. The company recently reported a modest half year result, in our view. An increase in operating expenses may impact meaningful profitability in the years ahead. New product launches also appear some time away from generating material revenues for the group.
Chris Batchelor, Spotee.com.au
The share price of this language technology and data services company has fallen heavily since August 2020 due to investors fearing sales growth had tapered off, or may even decline. This may be true in the short term. But in the longer term, this well managed business is positioned to capitalise on the booming artificial intelligence trend. If any positive news emerges regarding revenue forecasts, then the recent price appears most attractive.
Shaver Shop Group (SSG)
Shaver Shop is a quality business. It compares favourably to other retailers in terms of key metrics, such as gross margin and the cost of doing business. Online sales make up about 30 per cent of the total and continue to climb. Customer feedback is positive. The company was recently trading on an undemanding price/earnings multiple of less than 8 times and looks appealing.
This technology company delivered a net profit after tax of $41.3 million in the first half of fiscal year 2021. Group sales of $194.5 million were up 14 per cent on the prior corresponding period. The company continues to grow organically and via recent acquisitions. The share price has risen substantially in the past 12 months. Consider holding for potentially more favourable momentum.
This software-as-a-service company is expanding in the US following a recent capital raising. WSP could generate strong profit growth in the US if it can replicate its Australian and New Zealand success in terms of growing customer numbers and increasing the average spend per customer. However, the stock was recently trading on 8 times forecast sales, so it isn’t cheap, in our view.
The A2 Milk Company (A2M)
COVID-19 disrupted its Chinese daigou sales channel. First half 2021 revenue declined 16 per cent on the prior corresponding period to $NZ677.4 million. Net profit after tax fell 35 per cent to $NZ120 million. A2M infant formula is up against increasing competition from local brands in China. Also, birth rates in China have been declining. The share price remains under pressure.
The share price of this wealth management company has continued to fall. On March 5, 2018, the shares were priced at $5.07. On January 4, 2021, the shares were priced at $1.56. Investors lost faith in the company and its outlook. Any re-building process will take time. The shares closed at $1.115 on April 30, 2021. Other stocks appeal much more.
Chris Batchelor and related parties own shares in APX, SSG, CDA and WSP.
Thomas Wegner, Marcus Today
BetMakers Technology Group (BET)
This online wagering platform provider is benefiting from legislation that enables American states to make their own sports betting laws. Betting on sport is a growth industry. This company’s share price has risen from 25 cents on May 4, 2020 to trade at $1.34 on April 30, 2021. The stock is benefiting from an acquisition and growth in the US. It was added to the All Ordinaries Index in the March re-balance.
The share price of this building products supplier has risen from $3.48 on May 4, 2020 to trade at $5.97 on April 30, 2021. Home renovations during COVID-19 lockdowns contributed to the share price increase. Strong cash flow and capital expenditure cuts are behind a strong balance sheet. Strong home building demand is expected to continue until at least late next year.
Australian Finance Group (AFG)
This mortgage broking company is benefiting from a housing market recovery. AFG lodged a record $20.6 billion in home loan applications for the third quarter of fiscal year 2021. Third quarter loan applications were up 3.79 per cent on the prior quarter and increased 34.32 per cent on the same period last year. The positive lodgement trend supports the outlook for group earnings.
Lynas Rare Earths (LYC)
March quarter production for this rare earths mining company was broadly in line with expectations. On our analysis, only shipping delays prevented record sales revenue. China is increasing rare earths production, which can be seen as an indicator that the market will continue to grow.
The share price of this online retailer and pandemic beneficiary has fallen significantly since its October peak above $25. Adjusted EBITDA declined by more than 24 per cent, according to its its recent March quarter update. The company reported higher inventory levels and operating costs. The shares were trading at $11.05 on April 30.
This technology company provides investigative analytics and intelligence software. It recently lowered full year statutory revenue guidance from a forecast $193.5 million in the prospectus to between $180 million and $185 million. The share price has fallen from above $11 in January this year to trade at $4.13 on April 30. Better growth opportunities exist elsewhere, in our view.
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.