Braden Gardiner, Tradethestructure
BUY – BHP Group (BHP)
The global miner has been attracting buyers on the back of improving investor sentiment towards commodities. Also, I expect the potential for an improving Chinese economy to provide further support to the share price. Technically, I expect a move above $46 to propel the shares through resistance of $48.33. The shares were trading at $44 on July 6.
BUY – RPMGlobal Holdings (RUL)
RUL develops and provides software and advisory services to the mining industry, including professional development. RUL has delivered services to more than 125 countries. The shares fell from $1.70 on January 3 to close at $1.33 on May 24 before bouncing higher. My analysis suggests the share price has found support around $1.35 after closing at $1.475 on June 30. I expect buyer confidence to push up the share price from here.
HOLD – IGO Limited (IGO)
IGO is a nickel and lithium miner. We expect the company to continue benefiting from any rise in the lithium price. The company posted a strong operating performance in the quarter ending March 31. It lifted net profit after tax and reduced net debt quarter-on-quarter. The shares have risen from $11.77 on March 20 to trade at $15.615 on July 6.
HOLD – Brickworks (BKW)
Total revenue of $584 million in the first half of fiscal year 2023 was up 13 per cent on the prior corresponding period. The share price of this building products company has risen from $22.42 on January 4 to trade at $25.58 on July 6. The company has performed well, but the risk is a potentially weaker economy slowing the building sector. Investors may want to consider trimming their portfolios.
SELL – Coles Group (COL)
The supermarket giant faces tighter consumer spending and sales of non-essential items may come under pressure. The share price has risen from $16.46 on January 3 to trade at $18.29 on July 6. My analysis suggests Coles is trading around technical resistance. Investors may want to look elsewhere for capital growth.
SELL – Azure Minerals (AZS)
This mineral explorer is developing lithium and nickel assets. Investors are focused on emerging lithium producers. The share price has risen from 52 cents on June 1 to trade at $1.615 on July 6. In my opinion, the price has run too hard too fast and faces a correction. Investors may want to consider trimming holdings and cashing in some gains.
Top Australian Brokers
Tom Bleakley, BW Equities
BUY – Red 5 (RED)
The company’s King of the Hills gold mine in Western Australia produced 24,033 ounces in June, up from 19,039 ounces in May. The company retains production guidance of between 90,000 ounces and 105,000 ounces in the second half of fiscal year 2023 at an all-in-sustaining cost of between $A1750 and $A1950 an ounce. We expect favourable share price momentum to continue at this stage of the cycle.
BUY – Green Technology Metals (GT1)
GT1 is a North American lithium exploration and development business. It recently received a $20 million strategic investment from LG Energy Solution (LGES) at a big premium to GT1’s share price. The agreement includes an offtake term sheet for GT1 to sell 25 per cent of its spodumene concentrate production from its flagship Seymour project to LGES for five years. We see strategic value in GT1 as it continues to grow its lithium resource.
HOLD – Austco Healthcare (AHC)
AHC is an international provider of healthcare communication solutions. It supplies nurse-on-call communication systems to hospitals and other healthcare facilities. The company continues to win significant new contracts. We’re encouraged by the company’s ability to attract new business and believe AHC is poised to grow.
HOLD – Acusensus (ACE)
The company’s technology detects motorists using mobile phones while driving, failing to wear seat belts, speeding and monitoring vehicles of interest. It was recently awarded its first enforcement contract in the US. In May, the company upgraded revenue and EBITDA guidance for fiscal year 2023.
SELL – Auswide Bank (ABA)
A trading update in late May revealed the bank’s loan book had grown 13.9 per cent between June 30, 2022 and March 31, 2023. Customer deposits grew by 11.3 per cent. Loan book arrears greater than 90 days were at a low 0.04 per cent at March 31, 2023. We believe sustaining low arrears will be challenging given higher interest rates and borrowers moving from low fixed rate mortgages to higher variable rates.
SELL – Qantas Airways (QAN)
Demand for travel has been strong since lockdowns were lifted. But we believe the tourism sector faces challenging times as consumers reduce their discretionary spending as a result of higher interest rates and soaring cost of living increases. Outgoing chief executive Alan Joyce sold 2.5 million Qantas shares at $6.7479 at the start of June, according to a filing with the ASX. Investors may also want to consider trimming their portfolios.
Damien Shaw, Marcus Today
BUY – Karoon Energy (KAR)
This oil and gas explorer and producer has assets in Brazil and Australia. Production at its Bauna operation in Brazil has resumed and was recently averaging about 33,000 barrels of oil a day. The company would benefit from any increase in the crude oil price. We believe the company is trading at a discount given the shares have fallen from $2.41 on April 11 to trade at $2.005 on July 6.
BUY – EBR Systems Inc. (EBR)
This medical technology company has been attracting investor attention following positive clinical trial results surrounding its wireless cardiac pacing device for heart failure. The company is targeting US Food and Drug Administration approval. EBR has a stronger balance sheet after a recent capital raising. We consider EBR a speculative buy. But there is plenty of upside if all goes to plan.
HOLD – Lovisa Holdings (LOV)
This fashion jewellery and accessories retailer posted revenue of $315.5 million in the 2023 first half, up 44.8 per cent on the prior corresponding period. However, the share price has fallen from $26.81 on April 26 to trade at $19.81 on July 6. Challenging conditions in global economies may be behind the share price fall. Lovisa retains a competitive edge in its sector, as it can rapidly bring products to market. Lovisa is financially strong.
HOLD – Wesfarmers (WES)
This diversified industrial conglomerate has a sound business structure. Statutory net profit after tax of $1.384 billion for the half year ending December 31, 2022 was up 14.1 per cent on the prior corresponding period. Retail giants Bunnings and Kmart Group are strong performers. A risk to sales growth is potentially slower discretionary spending. The company’s lithium assets provide potential upside as the lithium market continues to grow.
SELL – Bank of Queensland (BOQ)
BOQ has entered into voluntary enforceable undertakings with the Australian Prudential Regulation Authority (APRA) and AUSTRAC to address the remediation of weaknesses and issues. BOQ is up against fierce competition for mortgages and deposits. The bank reported a statutory net profit after tax (NPAT) of $4 million in the first half of fiscal year 2023, down 98 per cent on the prior corresponding period. Two big, one-off non-cash items impacted NPAT. The shares have fallen from $6.94 on March 8 to trade at $5.54 on July 6.
SELL – Corporate Travel Management (CTD)
The company has won the travel management services contract for the whole of Australian Government for an initial term of four years, with a further three years of extension options. CTD will be the sole provider of this contract. This is a positive development. However, online corporate meetings remain a popular, inexpensive and convenient way for doing business. The online platform can be considered a competitor to physical travel. CTD shares have fallen from $21.01 on June 7 to trade at $18.23 on July 6.
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.