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Tom Bleakley, BW Equities
BUY RECOMMENDATIONS
ECS Botanics (ECS)
Chart: Share price over the year
A Tasmanian based hemp grower, processor and seller of branded food products. Senior management Alex Keach, Jason Hine and Guy Banducci have extensive experience in agriculture through to brand development and distribution. ECS has already harvested its first crop and aims to be one of the largest producers of hemp in Australia. The shares finished at 6.7 cents on August 8.
Phoslock Environmental Technologies (PET)
Chart: Share price over the year
A water remediation company with patented technology to treat blue-green algae. Phoslock has recently announced contract wins to treat lakes in China that are significantly larger than any previous works. Phoslock is expecting to win further big contracts in the US and Canada, which would further validate the competitive advantage of its technology on a global basis.
HOLD RECOMMENDATIONS
McPherson’s (MCP)
Chart: Share price over the year
Markets and distributes health care, skin care and consumer products in Australia and abroad. We expect a significant increase in export sales of its Dr LeWinn skin product to China via its partner. Strong domestic demand also exists for Dr LeWinn. The dividend yield is attractive and there’s potential for capital growth.
Respiri (RSH)
Chart: Share price over the year
A medical technology company developing devices to better manage asthma. The company anticipates first Australian sales of its wheezo monitoring device in 2020. Supplying the product to India is also part of the company’s plan. Offers long term potential, so keep an eye on updates. The shares finished at 9.5 cents on August 8.
SELL RECOMMENDATIONS
GrainCorp (GNC)
Chart: Share price over the year
An integrated grain storage, logistics, marketing and processing business. GNC recently issued a downgrade based on difficult trading conditions, with a below average crop again expected in 2019/2020. Apart from the drought in eastern Australia, GNC also faces increasing competition from other grain logistics and marketers diverting grain away from the company’s bulk handling facilities.
Blackmores (BKL)
Chart: Share price over the year
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This vitamins and supplements company was recently trading on above market multiples, in our view. Product pricing headwinds and challenges remain in relation to China. Net profit after tax of $44 million for the nine months to March 31, 2019 was down 14 per cent on the prior corresponding period. The shares closed at $83.69 on August 8, 2019, way off its 52 week high of $166.76 on August 30 last year.
John Athanasiou, Red Leaf Securities
BUY RECOMMENDATIONS
Transaction Solutions International (TSN)
Chart: Share price over the year
The acquisition of Cloudten Industries earlier this year adds more cloud and security to the company’s offering. The company released its first ever operating profit and positive operating cash flow for the year ending March 31, 2019. In our view, investors with an appetite for risk can consider accumulating at current levels. The shares closed at a cent on August 8. We own shares in TSN.
AHAlife Holdings (AHL)
Chart: Share price over the year
Owns and operates e-commerce platforms for lifestyle and design products. The company recently acquired digital media company Design Milk, which has more than 8 million social media followers. The board and senior management recently participated in a capital raising. We believe the shares are cheap at a closing price of less than a cent on August 8. A speculative buy.
HOLD RECOMMENDATIONS
Telstra (TLS)
Chart: Share price over the year
Shares in this telecommunications giant have enjoyed a strong run in calendar year 2019. We expect the company’s 5G network to attract more customers as it’s progressively rolled out. A dividend yield above 3 per cent is also appealing, particularly when compared to bank deposits in this low interest rate environment. The yield alone should support the share price.
AUB Group (AUB)
Chart: Share price over the year
AUB has a big Australasian equity based insurance broker network. It has a network of 93 businesses and more than 1 million policies across more than 600 locations. The stock is defensive and offers stable earnings growth.
SELL RECOMMENDATIONS
REA Group (REA)
Chart: Share price over the year
The real estate market has been weak for a long period, yet this digital advertising business specialising in property has defied the odds. The share price has been rising for most of calendar year 2019 to finish at $91.55 on August 8. Investors can consider taking some profits and perhaps buying back at lower levels.
Fortescue Metals Group (FMG)
Chart: Share price over the year
This iron ore producer has enjoyed a great run on the back of surging iron ore prices in the first half of calendar year 2019. However, the iron ore price has been recently retreating. Single commodity based companies are generally exposed to exaggerated moves in the underlying commodity. It may be prudent to reduce holdings at current levels.
David Thang, PhillipCapital
BUY RECOMMENDATIONS
Nanosonics (NAN)
Chart: Share price over the year
A force in the health care industry, the company focuses on ultrasound probe disinfection. Revenue growth continues each year, and 60 per cent is recurring. From a geographical perspective, 91 per cent of earnings are generated in North America. So a weaker Australian dollar is likely to offer a nice kicker to the bottom line.
Treasury Wine Estates (TWE)
Chart: Share price over the year
A global wine company, with brands including the prestigious Penfolds and Wolf Blass. The company is attractive on valuation grounds, and, as an added bonus, was recently trading on a fully franked dividend yield of 2.25 per cent. Offshore earnings also appeal, with 40 per cent generated in the US, 25 per cent in Asia and 11 per cent in Europe.
HOLD RECOMMENDATIONS
Magellan Financial Group (MFG)
Chart: Share price over the year
This global fund manager continues to ride the upward momentum wave. However, on valuation grounds, we believe prices have surpassed the top end of the scale. The risk is continuing trade tensions between the US and China.
The A2 Milk Company (A2M)
Chart: Share price over the year
After hitting a recent high of $17.30 on July 31, the price has retreated in line with the broader market. Should the bears remain in control, a layer of support is indicated between $14.56 and $15.08. If the price stabilises within support, the probability of a resuming long term uptrend increases. The shares finished at $15.25 on August 8.
SELL RECOMMENDATIONS
Computershare (CPU)
Chart: Share price over the year
Earnings in this share registry firm are sensitive to the direction of US interest rates. Its funds are exposed to US interest rates, so any cut could put downward pressure on CPU’s price. Further, we’re also concerned about the level of debt on its balance sheet. We believe it’s best to look elsewhere.
Bega Cheese (BGA)
Chart: Share price over the year
Recently cut its full year earnings guidance. Negative factors, such as drought and competitive pressures, are impacting performance. After forming a bearish triple top around $8 in July 2018, the sellers now have a firm stranglehold on the company. We prefer others. The shares closed at $3.94 on August 8.
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.
