Braden Gardiner, Tradethestructure
BUY – Northern Star Resources (NST)
This gold producer generated revenue of $4.131 billion in fiscal year 2023, an increase of 9 per cent on the prior corresponding period. Statutory net profit after tax of $585 million was up 29 per cent. The outlook is bright on the back of potentially higher gold prices. We expect share price momentum to continue. The share price has risen from $10.04 on October 3 to trade at $11.69 on November 2.
BUY – Dicker Data (DDR)
Dicker Data distributes hardware and software technology solutions. A market update on October 31 revealed unaudited gross revenue of $2.4 billion for the nine months ending September 30, an increase of 8 per cent on the prior corresponding period. EBITDA of $109 million was up 18.5 per cent. The share price has enjoyed strong momentum since August. My technical perspective suggests the upward price trend should continue.
HOLD – Red 5 (RED)
The company’s operations are in Western Australia’s renowned eastern goldfields region. A recent update revealed the company was on track to deliver at the top end of fiscal year 2024 guidance of between 195,000 ounces and 215,000 ounces at an all-in-sustaining cost of between $A1850 and $A2100 an ounce. Any further moves up in the gold price should flow to a higher share price.
HOLD – Monash IVF Group (MVF)
MVF develops assisted reproductive technologies and tertiary level pre-natal diagnostics. The company posted revenue of $213.6 million in fiscal year 2023, an increase of 11.1 per cent on the prior corresponding period. Underlying group net profit after tax of $25.5 million was up 14.7 per cent. The shares have risen from 92.5 cents on January 4 to trade at $1.31 on November 2. We expect the company to continue performing this financial year.
SELL – Deep Yellow (DYL)
Shares in this uranium company have risen from 52 cents on May 1 to trade at $1.345 on November 2. The company has moved higher on the back of a booming uranium sector, but I believe the stock has moved too high in a relatively short period and appears expensive at these levels. Investors may want to consider locking in some profits.
SELL – Wildcat Resources (WC8)
WC8 recently announced high grade lithium intersections at its Tabba Tabba lithium project in the Pilbara region of Western Australia. The share price soared following the news to trade at 79 cents on November 2. Although the short term trend has been up, I expect momentum to stall, so investors may want to consider locking in some gains at current levels.
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Arthur Garipoli, Seneca Financial Solutions
BUY – Mineral Resources (MIN)
This iron ore and lithium miner recently re-affirmed fiscal year 2024 volume guidance. Mining services production volumes of 66 million tonnes in the first quarter of fiscal year 2024 were up 14 per cent on the prior quarter. We expect continuing news flow involving the acquisition of the Bald Hill lithium mine. The recent sell off in the lithium sector gives investors an opportunity to buy this quality and well-managed company at a relatively attractive price.
BUY – Syrah Resources (SYR)
This graphite company operates the Balama mine in Mozambique and is the largest graphite producer outside of China. The SYR share price recently soared on news that China was implementing export controls on graphite products from December 1, 2023. China is the dominant global player in natural graphite and spherical graphite. We expect SYR to benefit from China’s decision on export controls.
HOLD – Nufarm (NUF)
Nufarm is a global crop protection and seed development company. We believe its seed business involving omega 3 canola and carinata leads to a bright outlook. We believe the market is undervaluing the company’s structural growth prospects. The company expects underlying EBITDA to range between $430 million and $440 million in fiscal year 2023.
HOLD – Wildcat Resources (WC8)
This lithium developer has been drilling at the Tabba Tabba project near Port Headland in Western Australia. Assay results indicate the Tabba Tabba project has the potential to host a tier-1 lithium deposit. WC8’s mining leases are close to several of the world’s hard rock mines operated by Pilbara Minerals and Mineral Resources. The company is continuing with an aggressive exploration campaign. Mineral Resources is now a substantial shareholder in WC8.
SELL – Azure Minerals (AZS)
Chilean chemical company SQM has lodged a takeover bid to acquire AZS by way of scheme of arrangement for $3.52 in cash a share. The AZS board has unanimously recommended shareholders accept the offer in the absence of a superior bid. The bid was 44.3 per cent higher than Azure’s closing share price on Friday, October 20. Conditions include SQM obtaining approval from Australia’s Foreign Investment Review Board. Investors may want to consider taking any profits now. The shares were trading at $3.69 on November 2.
SELL – Reece (REH)
Shares in this plumbing supplies company have fallen from $20.49 on August 22 to trade at $17.91 on November 2. The near term looks challenging in Australia and the US. Potentially softer activity levels and persisting cost pressures may lead to earnings pressure in fiscal year 2024, in our view. We expect higher interest rates to slow home building and renovations moving forward.
Peter Day, Sequoia Wealth Management
BUY – Brambles (BXB)
This integrated supply chain logistics giant recently reported sales revenue from continuing operations of $US1.640 billion in the first quarter of fiscal year 2024, an increase of 15 per cent at actual foreign exchange rates on the prior corresponding period. The company retained fiscal year 2024 guidance and was recently trading on an attractive price/earnings ratio compared to the historical long term. We believe there’s a chance guidance could be upgraded.
BUY – Allkem (AKE)
Allkem is a specialty lithium chemicals company. AKE has lithium brine operations in Argentina and a hard rock lithium operation in Australia. At the Olaroz facility, lithium carbonate sales volumes of 4554 tonnes for the September quarter were up 22 per cent on the prior corresponding period. Mt Cattlin posted record quarterly production of spodumene concentrate. Updates on the merger proposal with Livent Corporation present a near-term catalyst for AKE.
HOLD – Argosy Minerals (AGY)
AGY has a 77.5 per cent interest in the Rincon Lithium project in Argentina and a 100 per cent interest in the Tonopah Lithium project in the US state of Nevada. The company is progressing works at the 2000 tonnes per annum lithium carbonate production facility. The company announced production output had been constrained due to downtime associated with equipment modifications and performance testing. We have downgraded AGY from an outperform rating to a hold.
HOLD – Capricorn Metals (CMM)
Operational metrics at CMM’s Karlawinda gold project were comfortably tracking guidance in the September quarter of 2024. Gold production guidance is between $115,000 ounces and 125,000 ounces in fiscal year 2024. However, cash flows were softer than our estimate, which, according to CMM, was due to the timing of payments to a mining contractor and the capital associated with a scheduled tailings dam lift.
SELL – Fortescue Metals Group (FMG)
Iron ore production in the first quarter of fiscal year 2024 was stronger than expected, in our view, while sales, realised prices and costs met expectations. Full year 2024 volumes, costs and capital expenditure guidance remains unchanged. However, we note that Iron Bridge shipments were downgraded to 5 million tonnes at the recent site tour. The shares have risen from $20.81 on October 23 to close at $23.25 on November 2. Investors may want to consider cashing in some gains.
SELL – Reece (REH)
The first quarter 2024 trading update was broadly in line with our expectations. Sales revenue in Australia and New Zealand was up, but flat in the US on a US dollar basis. However, the outlook remains challenging given potentially weaker demand and moderating product inflation. In our view, the valuation of this plumbing supplies company remains stretched.
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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.