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John Forwood, Lowell Resources Funds Management

BUY RECOMMENDATIONS

Oklo Resources (OKU)

Chart: Share price over the year

A well funded gold explorer with an aggressive drilling program in the prolific western Mali gold belt in West Africa. Fresh high grade intercepts have been returned from several new discoveries. The shares were trading at 11.5 cents on July 4.

Comet Ridge (COI)

Chart: Share price over the year

A coal seam gas exploration and development company, with projects in New South Wales and Queensland. In our view, COI is one of the best quality junior and mid tier exposures to the Australian east coast gas thematic. It has a majority interest in the Albany 2 well and the Galilee Basin’s side track wells. Spudding is imminent and funded by Vintage Energy. COI shares were trading at 25.5 cents on July 4.

HOLD RECOMMENDATIONS

Gold Road Resources (GOR)

Chart: Share price over the year

GOR is a 50 per cent joint venture partner in Australia’s largest new gold mine development, known as the Gruyere project in Western Australia. First gold has just been produced with partner Gold Fields of South Africa. Hold, as we believe GOR is a potential takeover target. The shares have risen from 67.5 cents on January 4 to trade at $1.13 on July 4.

Cue Energy Resources (CUE)

Chart: Share price over the year

Cue is an oil and gas exploration and production company. Cue and joint venture partners plan to drill the Ironbark-1 well in offshore Western Australia in 2020. The best estimate is 15 trillion cubic feet of prospective recoverable gas. Oil production continues at the Maari field in offshore New Zealand.

SELL RECOMMENDATIONS

St Barbara (SBM)

Chart: Share price over the year

The shares were punished after the company downgraded production guidance at its Gwalia gold mine in Western Australia. SBM had difficulties raising equity for its Canadian gold mine acquisition Atlantic Gold, which looks to be well valued.

Dacian Gold (DCN)

Chart: Share price over the year

The shares plunged after Dacian downgraded production forecasts at its Mt Morgans gold mine. Coming at the same time as other Western Australian gold development disappointments, it may take some time to repair the share price. The shares have fallen from $1.585 on May 31 to trade at 49.7 cents on July 4.

John Athanasiou, Red Leaf Securities

BUY RECOMMENDATIONS

Bellamy’s Australia (BAL)

Chart: Share price over the year

Bellamy’s has been out of favour in the infant milk formula sector. Investors have been disappointed with delays in BAL gaining its SAMR (State Administration for Market Regulation) accreditation, which is required to sell product in mainland China retail outlets. We anticipate BAL will receive accreditation in the near term, which will revalue the company.

THC Global Group (THC)

Chart: Share price over the year

The initial euphoria within the medical cannabis sector has subsided as investors seek to separate the contenders from the pretenders. Given that THC Global is one of the few players to hold all three cannabis licences within Australia means it could be the major player in the medical cannabis industry.

HOLD RECOMMENDATIONS

Coles Group (COL)

Chart: Share price over the year

This supermarket giant recently announced a strategy to cut costs and attract customers, which pleased investors and pushed the share price higher. The strategy makes sense, but shareholders should hold their position until there’s evidence it’s effective against competitors Woolworths and Aldi.

Fortescue Metals Group (FMG)

Chart: Share price over the year

The share price has soared on the back of rising iron ore prices. FMG shareholders have done well, but should resist the temptation to add to their winning positions as the commodity cycle could turn against them. Hold until a clearer picture emerges on the outlook for the iron ore sector.

SELL RECOMMENDATIONS

Myer Holdings (MYR)

Chart: Share price over the year

In the first half of calendar 2019, the share price of this department store chain had been one of the better performers. The share price rose from a 52 week low of 36 cents on February 21 to a year high of 74 cents on April 17. The shares were trading at 54 cents on July 4. We believe investors remain concerned as to whether the company can lift returns. In our view, more evidence is needed.

Syrah Resources (SYR)

Chart: Share price over the year

This graphite miner was recently the most shorted stock on the ASX. Short sellers have been questioning whether SYR can turn a solid profit from its African operations. In our view, recent capital raisings have been frustrating shareholders. The shares have fallen from a 52 week high of $3.057 on July 27 last year to trade at 86.2 cents on July 4, 2019. Until sentiment shifts, we believe the miner is best avoided.

David Thang, PhillipCapital

BUY RECOMMENDATIONS

The A2 Milk Company (A2M)

Chart: Share price over the year

The share price significantly declined from an April 2019 high of $16.08 to a June 2019 low of $12.86. There’s room for further upside should prices decisively break above $14.72. If this positive scenario evolves, then a resumption of the long term uptrend is likely to follow. The shares closed at $14.22 on July 4.

Macquarie Group (MQG)

Chart: Share price over the year

A best of breed in the financial services sector, with consistent double digit annual earnings growth. An added bonus is the company’s dividend yield around 4.5 per cent on July 4, which is 45 per cent franked. The path is clear for further gains over the broader horizon.

HOLD RECOMMENDATIONS

Magellan Financial Group (MFG)

Chart: Share price over the year

This global fund manager continues to ride the upward momentum wave. There’s room for more upside in the short term. But on valuation grounds, we believe prices have surpassed the top end of the scale. The risk is going to be trade tensions between the US and China.

Afterpay Touch Group (APT)

Chart: Share price over the year

The share price of this buy now, pay later company has become increasingly volatile. No doubt, APT is a market darling among the investment community. However, the short term risk is new competitors, with the likes of Visa looking for a slice of market share.

SELL RECOMMENDATIONS

Costa Group Holdings (CGC) 

Chart: Share price over the year

This Australian horticultural company has provided two negative trading updates to the market. In our view, agricultural and pricing related issues continue to put a lid on future earnings. I like CGC over the longer term. However, in the absence of any positive catalyst, we believe it’s best to look elsewhere.

Vocus Group (VOC) 

Chart: Share price over the year

Several suitors shelved takeover plans for VOC after doing their due diligence. Consequently, the share price of this infrastructure-rich telecommunications group has suffered. Key support is indicated around $2.94. A sustained break below this level would likely put further downward pressure on the share price. The shares finished at $3.13 on July 4.

 

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