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Tom Bleakley, BW Equities
BUY RECOMMENDATIONS
PointsBet Holdings (PBH)
Chart: Share price over the year
PBH is an Australian and US based online bookmaker. Sports betting was illegal across all US states except Nevada until May 2018 when the existing legislation was overturned. States can now make their own decision on legalising sports betting. PBH is expanding in the US with an estimated addressable market of $US100 billion a year.
Phoslock Environmental Technologies (PET)
Chart: Share price over the year
Phoslock is a water remediation company, manufacturing and selling a bentonite and lanthanum based product to remove phosphate. Phoslock product cleaned a lake in China and we expect further sales to follow. Florida has recently announced it will spend $US625 million on water remediation, so there is potential to win large contracts in the US.
HOLD RECOMMENDATIONS
PolyNovo (PNV)
Chart: Share price over the year
PolyNovo is selling its patented BTM (biodegradable temporising matrix) wound care product to the US. Initial sales growth has been strong. BTM product also has the potential to treat hernias. Potentially, it may also aid in the slow release of insulin for diabetes treatment.
5G Networks (5GN)
Chart: Share price over the year
A telecommunications company providing data networking, cloud and hosting services. 5G Networks has been an aggressive acquirer. Strong management has been able to grow the business. The shares have risen from 45 cents on January 3 to trade at $1.59 on June 28.
SELL RECOMMENDATIONS
Sims Metal Management (SGM)
Chart: Share price over the year
A scrap metals and electronics recycler. While sales revenue was up in the 2019 first half compared to the corresponding period, net profit after tax and diluted earnings per share fell. SGM is also facing headwinds in exporting waste product to China. In our view, it will need to further process scrap metal to smelter ready product, which we expect will increase its cost base.
OFX Group (OFX)
Chart: Share price over the year
OFX offers an online international payments service for consumer and corporate clients. It has a strong brand and technology capabilities. But there is growing disruption risk from financial technology competitors, considering OFX Group’s strong margins.
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Tony Locantro, Alto Capital
BUY RECOMMENDATIONS
Eagle Mountain Mining (EM2)
Chart: Share price over the year
This copper and gold explorer has recently completed a rights issue at 15 cents. But the share price remains weak. The Silver Mountain Project in Arizona has shown potential following recent drilling programs. Advanced project opportunities are being assessed, which may complement the existing portfolio. EM2 chief executive Charles Bass is highly regarded in the mining industry. In my view, EM2 appears to be a quality junior with an attractive risk/reward profile. The shares finished at 12 cents on June 27.
Marenica Energy (MEY)
Chart: Share price over the year
The uranium sector remains subdued, but juniors, such as MEY, should offer significant speculative upside on a change in sentiment. New uranium licences have been granted in Namibia, and the company has been advancing intellectual property technology to assist in developing low grade deposits. The technology has three patents, with the aim of reducing operating and capital expenditure, which provides the catalyst to explore outside the Marenica project. The company requested a trading halt after the close on June 27 pending an announcement.
HOLD RECOMMENDATIONS
Red Metal (RDM)
Chart: Share price over the year
The share price of this base metals explorer has struggled around 9 cents. However, the company offers exposure to major exploration projects to be funded by Oz Minerals. Defining major drilling targets takes time. The Nullarbor region is slowly gaining attention as a new frontier for exploration and RDM is regarded as an early mover. In my view, RDM offers an attractive risk/reward profile at the current share price. The shares closed at 9.2 cents on June 27.
AdAlta (1AD)
Chart: Share price over the year
This drug company is developing a potential new treatment (AD-214) for idiopathic pulmonary fibrosis through a phase 1 trial in humans. The first stage will involve a four week toxicology study later this year, while developing an i-body pipeline through a collaboration with UK based Excellerate Bioscience.
SELL RECOMMENDATIONS
Northern Star Resources (NST)
Chart: Share price over the year
The Australian gold sector has seen strong buying with the Australian dollar gold price recently breaking $2000 an ounce. NST’s share price reached a 52 week high of $11.92 on June 25 and represents an opportunity to lock in part profits in anticipation of a correction. Shares in this gold producer closed at $11.66 on June 27.
Commonwealth Bank of Australia (CBA)
Chart: Share price over the year
Bank stocks have recovered post a coalition election victory. But major risks remain in a falling housing sector and a weak growth economy. The shares have risen from $72.83 on May 17 to close at $83 on June 27. Consider selling into strength.
Peter Moran, Wilsons
BUY RECOMMENDATIONS
National Australia Bank (NAB)
Chart: Share price over the year
It appears the bad news is behind NAB. The fallout from the banking Royal Commission is now priced in and the NAB is fixing the issues. The NAB has also taken significant steps to improve its balance sheet and is undertaking a major information technology focused transformation. With well over half its earnings generated from corporate and institutional banking, NAB is better positioned than competitors in the event of any housing market related concerns.
ReadyTech Holdings (RDY)
Chart: Share price over the year
With more than 3600 customers, ReadyTech provides software for the education and employment sectors. ReadyTech’s products are usually subscription based and vital to a customer’s operation. Consequently, churn rates are low and margins are good. We believe this profitable company is likely to generate solid earnings growth going forward.
HOLD RECOMMENDATIONS
Woolworths (WOW)
Chart: Share price over the year
A well managed business with defensive earnings characteristics. The supermarket environment is likely to improve, driven by higher grocery prices. Given the solid share price rise this year, the company is appropriately valued at these levels.
Spark Infrastructure Group (SKI)
Chart: Share price over the year
SKI has an attractive portfolio of electricity distribution assets. In our view, there are limited prospects for growing these regulated assets, but SKI generates reliable revenue. Spark’s share price has performed well in the current low interest rate environment. Hold at current prices.
SELL RECOMMENDATIONS
Scentre Group (SCG)
Chart: Share price over the year
The retail leasing environment is likely to get more difficult for this shopping centre giant. Falling housing prices are providing near term headwinds for retailers as consumers spend less. When consumers do spend, it’s increasingly online.
Wesfarmers (WES)
Chart: Share price over the year
The Wesfarmers share price has pushed higher since the demerger of Coles supermarkets. However, a recent strategy day revealed, in our view, a surprisingly soft update for retail chain Kmart. Retailer Target is continuing to struggle. We expect Target and Kmart to be paying employees higher wages when new enterprise bargaining agreements are implemented. Hardware giant Bunnings is doing better, but the softer housing market is a potential headwind.
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.
