18 Share Tips – 16th September 2024

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Jabin Hallihan, Auburn Capital Wealth Management

BUY RECOMMENDATIONS

BUY – Perpetual (PPT) 

This diversified financial services company delivered operating revenue of $1.355 billion in fiscal year 2024, an increase of 32 per cent on the prior corresponding period. Asset management revenue of $887.6 million was up from $600.4 million in fiscal year 2023. Total assets under management of $215 billion were up 1 per cent. The company’s earnings growth profile offers solid potential. With fair value estimates above the current price, I believe the shares offer an attractive entry level.

BUY – Fortescue (FMG)

This iron ore producer presents a buying opportunity given the stock has fallen significantly in calendar year 2024. The shares have plunged from $29.39 on January 2 to trade at $16.495 on September 12. Despite short term pressure from lower iron ore prices, Fortescue’s diversification efforts in Africa and green energy projects offer long term growth potential. With a potential 7 per cent dividend yield in fiscal year 2025, long term investors may benefit by establishing a position while the shares trade on a discounted price-earnings multiple.

HOLD RECOMMENDATIONS

HOLD – APM Human Services International (APM) 

This human services provider assists people to find meaningful employment, supports others with disabilities and provides innovative health solutions. Despite missing fiscal year 2024 earnings forecasts, we believe a takeover proposal at $1.45 a share from Madison Dearborn Partners (MDP) is likely to be successful. A steady takeover process and fair valuation offer potential stability, supporting my hold recommendation for now.

HOLD – Qantas Airways (QAN) 

The airline giant posted a statutory profit after tax of $1.25 billion in full year 2024, a fall of 28 per cent on the prior corresponding period. Pent up travel demand following the pandemic has waned amid fierce competition. Despite challenges in the leisure market, Qantas retains strong market share among business travellers. The shares have risen from $5.78 on August 5 to trade at $6.81 on September 12. In my view, the shares are marginally overvalued at this point, but are worth holding for potential growth in the long term.

SELL RECOMMENDATIONS

SELL – Bega Cheese (BGA) 

This Australian dairy and food company posted statutory revenue of $3.521 billion in fiscal year 2024, an increase of 4 per cent on the prior corresponding period. Normalised profit after tax of $29.2 million was up 2 per cent. The company’s branded segment is performing strongly. But its bulk business has been pressured due to misaligned farm gate milk prices and commodity prices. The shares have risen from $4.26 on August 28 to trade at $5.35 on September 12. The rapid share price rise leaves the stock overvalued at this point, in my view.

SELL – REA Group (REA)  

REA is a global digital advertising business specialising in property. UK counterpart Rightmove plc recently rejected REA’s £5.6 billion cash and stock takeover proposal. REA shares could be pressured if the company lodges a higher bid for Rightmove. REA delivered a strong result in fiscal year 2024, with revenue increasing 23 per cent on the prior corresponding period. Net profit after tax was up 24 per cent. The shares have fallen from $220.49 on August 26 to trade at $198.65 on September 12.

Niv Dagan, Peak Asset Management

BUY RECOMMENDATIONS

BUY – Kalgoorlie Gold Mining (KAL) 

The company has a portfolio of exploration projects in Western Australia and a total gold resource exceeding 214,000 ounces. It recently completed a second air core drilling project at its Pinjin Gold project. A total of 3726 metres were drilled in 67 air core holes at three sites. Assay results are expected in late September to early October. Further air core drilling will test additional targets in October. This active explorer is well funded after raising capital. The shares were priced at 2.6 cents on September 12.

BUY – Aurumin (AUN)

Aurumin is embarking on a drilling campaign to expand its gold inventory and potentially find economic iron ore mineralisation at its range of projects around Western Australia’s historic town of Sandstone. The company has started multiple dialogues with interested parties regarding iron ore from its Sandstone operations. With the gold price moving above $US2500 an ounce, we see upside risk to valuations. The shares have risen from 3.5 cents on August 20 to 4.1 cents on September 12.

HOLD RECOMMENDATIONS

HOLD – Pilot Energy (PGY)

Pilot is a junior oil and gas explorer and producer. It’s pursuing a transition to develop carbon management projects and the production of hydrogen and clean ammonia for export to emerging clean energy markets. The company is proposing to develop Australia’s first offshore carbon storage project. We feel this could be a major catalyst for the stock. It recently announced it had received initial Commonwealth grant funding of $3 million to progress carbon capture for the mid-west region of Western Australia. The shares were trading at 1.9 cents on September 12.

HOLD – Golden Deeps (GED)

The company aims to develop high grade battery metals for the growing renewable energy markets. The company recently announced that thick copper and zinc sulphide mineralisation had been intersected at its Havilah project in the Lachlan Ford Belt Copper Gold province of New South Wales. The company is fully funded after receiving firm commitments to raise $1.78 million. Encouraging results offer potential. The shares were trading at 4 cents on September 12.

SELL RECOMMENDATIONS

SELL – Myer Holdings (MYR)

In August, the department store giant guided for net profit after tax in fiscal year 2024 to range between $50 million and $54 million. The latest preliminary and unaudited guidance represents a fall from $71.1 million in fiscal year 2023. The company acknowledged weaker NPAT reflects a challenging consumer and trading environment, the impact of store closures and inflationary cost pressures. Also, we expect discounting in the Christmas period.

SELL – JB Hi-Fi (JBH)

This consumer electronics giant posted net profit after tax of $438.8 million in fiscal year 2024, a fall of 16.4 per cent on the prior corresponding period. The ordinary dividend per share was down 16.3 per cent. The shares have risen from $53.84 on January 2 to trade at $81.96 on September 12. The shares appear to be trading at a premium at these levels. Investors may want to consider cashing in some gains.

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Christopher Watt, Bell Potter Securities 

BUY RECOMMENDATIONS

BUY – Accent Group (AX1) 

The company holds a leading position in the footwear retail sector. The company has grown from 524 stores in fiscal year 2020 to 895 stores in fiscal year 2024. It has 32 websites and 10.2 million contactable customers. The company is resilient and offers a solid growth trajectory. Its ability to capture market share and deliver consistent earnings makes it an attractive investment.

BUY – BHP Group (BHP)

Our buy recommendation on this global miner is based on its diversified portfolio and robust operational efficiency. The company’s exposure to high demand commodities amid disciplined cost management positions it well for sustained profitability and long term growth. The shares are trading at an appealing entry level compared to earlier in the year.

HOLD RECOMMENDATIONS

HOLD – Fortescue (FMG)

Fortescue’s recent performance is in line with expectations, but the outlook for fiscal year 2025 suggests potential margin pressure due to higher operating costs and subdued iron ore prices. While its dividend yield remains attractive, the company’s growth prospects are limited, in our view, which is behind our hold recommendation​.

HOLD – Wesfarmers (WES) 

The industrial conglomerate generated revenue of $44.189 billion in fiscal year 2024, an increase of 1.5 per cent on the prior corresponding period. Net profit after tax of $2.557 billion was up 3.7 per cent. The company’s diversified business model provides stability. We suggest investors retain a position despite limited upside potential. The final fully franked dividend was $1.07 a share.

SELL RECOMMENDATIONS

SELL – Perpetual (PPT)

Perpetual is a global financial services firm. On May 8, 2024, PPT entered into a scheme implementation deed with an affiliate of Kohlberg, Kravis Roberts & Co to sell its corporate trust and wealth management businesses for $A2.175 billion via a scheme of arrangement. Completion is anticipated to occur in February 2025 subject to satisfying customary conditions. Perpetual will become a standalone global asset management business. Underlying profit after tax of $206.1 million was up 26 per cent in fiscal year 2024 when compared to the prior corresponding period. But the company reported a statutory loss after tax of $472.2 million. The final dividend of 53 cents a share was lower than expected. The shares have fallen from $24.02 on May 7 to trade at $18.97 on September 12. Other stocks appeal more at this stage of the cycle.

SELL – Johns Lyng Group (JLG)

The group delivers building and restoration services in Australia and the US. Group revenue of $1.158.9 billion in fiscal year 2024 was down about 9.55 per cent on the prior corresponding period. Net profit after tax marginally rose from $62.8 million in fiscal year 2023 to $63.3 million in fiscal year 2024. The shares have fallen from $5.80 on August 1 to trade at $3.37 on September 12. Uncertain market conditions can lead to earnings volatility.

Please note. Perpetual is recommended as a buy and a sell as sharemarket experts offer different views about the company.

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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.