18 Share Tips – 14th April 2025

Welcome to this week’s edition of 18 Share Tips – our weekly selection of top ASX shares, chosen by leading analysts, that we think are worth considering.

This week Michael Gable of Fairmont Equities, Tony Paterno of Ord Minnett and Jabin Hallihan of Family Financial Solutions share their ‘Buy’, ‘Hold’ and ‘Sell’ recommendations.

Please note these share tips are simply recommendations and are in no way intended as financial advice.  These share tips are general advice and don’t take into account any individual’s financial situation. Investors are advised to seek professional financial advice before investing.

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Michael Gable, Fairmont Equities

BUY RECOMMENDATIONS

BUY – Vaneck Gold Miners ETF (GDX)

I remain bullish on the gold price and this exchange traded fund is an effective way to capture future upside. Purchasing an ETF containing a range of gold mining companies reduces and spreads risk compared to investing in a single gold mining exposure. An ETF offers leverage to gold’s upside, and we expect gold stocks to move higher than the underlying gold price from here. I’m expecting the gold price to hit levels around $US4000 an ounce during 2025.

BUY – Macquarie Group (MQG)

The MQG share price tends be leveraged to the broader market. Big falls in the indices are reflected in Macquarie’s share price. However, it works both ways and we believe the sharp sell-off presents an opportunity to buy MQG shares at a top value price. We expect Macquarie’s share price to outperform the S&P/ASX 200 index when a stock market recovery gets underway. This diversified financial services provider has a strong track record of performance.

HOLD RECOMMENDATIONS

HOLD – BHP Group (BHP)

The global miner’s share price has been smashed in the past 15 months. BHP was trading near $50 a share in January 2024. It was recently trading below $35. In our view, there’s a distinct possibility funds will flow into undervalued resource stocks when market volatility subsides. We expect investors to be attracted to companies with diversified and quality assets that generate reliable revenue and earnings at the expense of technology stocks, which are harder to value in an uncertain world.

HOLD – Aristocrat Leisure (ALL)

Aristocrat is a global gaming content and technology company. It has generated strong earnings growth over many years and its revenue stream is most reliable. In our view, the recent fall in ALL’s share price is overdone and has more to do with market sentiment than operating performance. We expect the share price to recover, so investors may want to consider topping up their holdings at these levels.

SELL RECOMMENDATIONS

SELL – Bank of Queensland (BOQ)

The regional banks tend to lag the big four banks due to higher funding costs and lack of scale. In our view, BOQ will struggle to meet its targets in this fiercely competitive environment. Given the recent crash in the broader market, the big four banks are now trading at cheaper levels, and their shares are likely to experience increasing buying volumes at the expense of the regionals, such as BOQ.

SELL – Transurban Group (TCL) 

The company generates revenue from toll roads in Australia, the United States and Canada. Transurban is widely regarded as a defensive stock, but debt levels are high, and we find it difficult to identify sufficient catalysts that will lead to a marked share price improvement from here. The broader market is now much cheaper following the stock market crash and a range of quality stocks recently gave up almost a year’s worth of gains. Today’s market conditions present investors with an opportunity to rotate out of defensive stocks for beaten down quality companies.

Tony Paterno, Ord Minnett

BUY RECOMMENDATIONS

BUY – Judo Capital Holdings (JDO)

This Australian lender focuses on small and medium size enterprises. Judo continues to successfully execute its strategy. It’s prudently growing its loan and deposit books. The company reported a net profit after tax of $40.9 million in the first half of fiscal year 2025, up 70 per cent on the prior corresponding period. It’s rebuilding its net interest margin amid delivering operating leverage and maintaining asset quality. JDO upgraded its net interest margin guidance to the top end of previously provided ranges in the second half and for full year 2025. The company offers upside potential if it can meet its targets.

BUY – Macquarie Group (MQG)

Macquarie is a global diversified financial services provider. It provides banking services, asset management, capital markets and commodity markets. Despite the market correction, Macquarie Group’s share price reflects its high beta nature. The company remains well positioned to leverage global mega trends, offering significant growth opportunities and attractive returns. In a third quarter trading update in February, MQG noted fiscal year 2025 net profit after tax was broadly in line with the prior corresponding period.

HOLD RECOMMENDATIONS

HOLD – James Hardie Industries PLC (JHX)

James Hardie is a leading global producer and marketer of high performance fibre cement. The company recently announced a part cash and part scrip acquisition of Chicago-based outdoor decking and railings company AZEK for $US8.75 billion. In our view, key challenges apparent with the AZEK acquisition include diluting earnings per share in fiscal year 2026, the offer premium is above synergy value and pro-forma leverage will rise next financial year. Recently, James Hardie announced it was on track to deliver fiscal year 2025 guidance and re-affirmed growth plans for fiscal year 2026. At recent share price levels, JHX offers valuation appeal.

HOLD – JB Hi-Fi (JBH)

The consumer electronics giant posted another strong set of results in the first half of fiscal year 2025. The results were driven by market share gains, disciplined cost management and solid cash conversion. Total sales of $5.67 billion were up 9.8 per cent on the prior corresponding period. Earnings before interest and tax of $419.9 million were up 8.6 per cent. Sales momentum continued in January 2025. We believe the Australian retail environment will continue to improve in fiscal year 2025, so like-for-like sales growth and gross margin trends should remain strong for JBH.

SELL RECOMMENDATIONS

SELL – ASX Limited (ASX)

The Reserve Bank of Australia and the Australian Securities and Investments Commission (the regulators) have expressed concerns about the management of operational risk at the ASX after the CHESS batch settlement failure on December 20, 2024. Among measures taken in addressing RBA and ASIC concerns, ASIC has directed the ASX to engage an expert approved by ASIC to undertake a technical review of CHESS. Also, ASX was recently trading on a significant price/earnings multiple premium compared to the S&P/ASX 200. We can’t justify the company’s elevated valuation.

SELL – Liontown Resources (LTR)

Liontown is a battery minerals provider. It recently started underground production at the Kathleen Valley lithium operation, with the first blast fired on schedule. It marks the transition from open pit to underground operations during fiscal year 2026. The company delivered an in-line result in the first half of fiscal year 2025, generating $100 million in revenue. With no signs of lithium price relief in the near term, we’re forecasting cash on hand of $193 million in the first half to fall by up to $50 million in the second half.

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Jabin Hallihan, Family Financial Solutions

BUY RECOMMENDATIONS

BUY – Praemium (PPS)

The company’s investment platform enables financial advisers and wealth managers to provide solutions to their clients via a seamless digital experience. The company’s competitive valuation positions it as an affordable option compared to its industry peers. Revenue and other income of $52.3 million in the first half of fiscal year 2025 was up 32 per cent on the prior corresponding period. Also, we’re forecasting earnings to increase, so Praemium offers an attractive growth trajectory. Combined with its innovative platform and strong market potential, we’re confident about the company’s outlook.

BUY – The a2 Milk Company (A2M)

The a2 Milk Company is a premium dairy business. The company delivered a strong interim result in fiscal year 2025, driven by continuing growth in the China and other Asia segment and supported by the US segment. A2M established a dividend policy for the first time in the company’s history in November 2024. A2M declared a fully franked interim dividend of NZ8.5 cents a share. The company’s innovative approach and solid execution positions it for continuing growth.

HOLD RECOMMENDATIONS

HOLD – Woolworths Group (WOW)

The supermarket giant retains a strong competitive position in the retail space. The company benefits from a broad market presence and from delivering value to its loyal customers. Group sales of $35.9 billion in the first half of fiscal year 2025 were up 3.7 per cent on the prior corresponding period. The stock was recently trading on a dividend yield above 4 per cent. Operationally, the company continues to execute well. The stock is defensive and appeals in volatile times.

HOLD – ANZ Group Holdings (ANZ)

The ANZ recently entered into a court enforceable undertaking with the Australian Prudential Regulation Authority (APRA) to address issues relating to the bank’s non-financial risk management practices and risk culture. APRA has increased the capital add-on applied to ANZ from $750 million to $1 billion. While the company remains fundamentally sound with strong banking operations, uncertainty around regulatory scrutiny and risk management processes temper immediate upside potential, in our view.

SELL RECOMMENDATIONS

SELL – REA Group (REA)

REA Group remains a leader in the digital property listings sector, but the competitive landscape is evolving. CoStar Group has raised its offer to $4.43 a share to acquire Domain, which, if successful, could generate fierce competition for REA. Domain has granted CoStar Group access to exclusive due diligence. REA stock was recently trading at elevated levels. Our fair value estimate is $143 a share. Given the market sell-off and the potential for competition to intensify, investors may want to consider selling some or all their positions in REA.

SELL – Xero (XRO)

XRO provides cloud accounting software. It enjoys a significant share of the Australian and New Zealand markets. It continues to expand in North America, but customer acquisition costs remain high. Its subscriber base in North America was 365,000 in the first half of fiscal year 2025, which is relatively small in a region that has millions of small to medium-sized businesses. XRO is up against fierce competition in overseas markets. The shares have fallen from $186.26 on February 19 to trade at $156.18 on April 10. In our view, the shares remain significantly over-valued.

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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.