Michael Gable, Fairmont Equities
BUY RECOMMENDATIONS
Aristocrat Leisure (ALL)
Chart: Share price over the year
This gaming machine company generates strong revenue and earnings in the US, so we expect ALL to bounce back strongly in line with the start of an improving economy in America. Aristocrat has a history of strong earnings growth, so a weaker share price provides a buying opportunity. The shares reached a 52-week high of $38.23 on February 20. The shares closed at $22.50 on April 16. In terms of the share price chart, ALL seems to have found significant support.
Woodside Petroleum (WPL)
Chart: Share price over the year
Low crude oil prices provide an opportunity to buy energy stocks at cheaper levels. WPL has support at recent levels given the stock has been punished since February 20 when it was priced at $33.25. Any sustained rise in the crude oil price should flow to WPL’s share price. The shares finished at $20.92 on April 16.
HOLD RECOMMENDATIONS
CSL (CSL)
Chart: Share price over the year
The share price of this blood products company continues to hold up relatively well, particularly compared to the broader market. However, the share price has been volatile, with big swings in either direction. The company has an enviable track record, so we expect CSL to continue outperforming in the long term. The stock closed at $324.86 on April 16.
Macquarie Group (MQG)
Chart: Share price over the year
The shares found buyer support after hitting a year low of $70.45 on March 23. Shares in this diversified financial services company finished at $99 on April 16. When sharemarkets recover, we expect MQG to do well, as it’s a proxy for equity markets. The company is still way off its 52-week high of $152.35 on February 20.
SELL RECOMMENDATIONS
Unibail-Rodamco-Westfield (URW)
Chart: Share price over the year
Owns and operates 90 shopping centres, including 55 flagships in Europe and the US. The company has bounced off its low of $4.09 on April 6, but URW faces significant challenges due to the Coronavirus. We believe tenancy issues and low consumer spending will take its toll on profitability. Any rallies back above $6 present an opportunity to sell. The stock closed at $4.66 on April 16.
Webjet (WEB)
Chart: Share price over the year
A lot of bad news has already been priced into this online travel agency. But the shares are yet to find big buyer support, and, in our view, risk remains to the downside. In the absence of overseas travel, we can’t find a catalyst to lift the share price. The shares finished at $2.59 on April 16.
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Nathan Lodge, Securities Vault
BUY RECOMMENDATIONS
Genetic Technologies (GTG)
Chart: Share price over the year
The company’s tests can determine a person’s risk of developing a chronic disease, such as breast and colorectal cancers. The company is gaining support from medical practitioners, and its platform is broadening distribution. GTG has also strengthened its cash position via a capital raising. We retain a speculative buy recommendation. The shares were trading at less than a cent on April 16.
Peninsula Energy (PEN)
Chart: Share price over the year
The Coronavirus has forced several global uranium mines to suspend production, causing a supply shock. Consequently, the uranium spot price has risen about 15 per cent since its low in mid March. A PEN customer recently brought forward a uranium oxide order for 116,000 pounds, generating about $US4.1 million for PEN. In order to fulfil contracts, PEN buys uranium in the spot market as well as using its existing inventories. PEN has an additional 4.2 million pounds committed for sale. The shares were trading at 17 cents on April 16.
HOLD RECOMMENDATIONS
Genetic Signatures (GSS)
Chart: Share price over the year
The company’s EasyScreen SARS-CoV-2 Detection Kit has been approved by the Therapeutic Goods Administration to be included on the Australian Register of Therapeutic Goods (ARTG). The company says registration provides an opportunity for greater market access during the Coronavirus pandemic and upcoming domestic flu season. The detection kit, in conjunction with the company’s highest throughput instrument, enables laboratories to process about 1500 samples per instrument in a day.
Pilbara Minerals (PLS)
Chart: Share price over the year
This lithium and tantalum company announced it had moderated its production strategy during the March quarter. It focused on plant recovery improvements and matching site production and available stocks to customer demand. The company says its strategy, including minimising investment in working capital, has led to a stronger balance sheet. The company closed the March quarter with $108.2 million in cash.
SELL RECOMMENDATIONS
Ardent Leisure Group (ALG)
Chart: Share price over the year
People have been ordered to stay at home and retain social distance elsewhere. ALG closed its theme parks Dreamworld and WhiteWater World on March 23. Main Event entertainment centres in the US will remain closed until at least April 30. It’s unclear when these venues will re-open.
PolyNovo (PNV)
Chart: Share price over the year
This biotechnology company involved in dermal regeneration solutions posted strong sales results for the 2020 March quarter. Sales of NovoSorb polymers were up 166 per cent on the prior corresponding period to $4.49 million. The shares have risen from $1.32 on March 23 to trade at $2.04 on April 16. Investors can consider taking profits in this volatile market.
Peter Moran, Wilsons
BUY RECOMMENDATIONS
Monadelphous Group (MND)
Chart: Share price over the year
The company’s track record shows MND is one of the best operators in the engineering and contracting sector, in our view. Engineering and construction earnings are likely to take a hit due to the Coronavirus. However, maintenance is required for production, so we expect revenues in this division to remain relatively stable. Any deferred engineering and construction work is likely to be done in the future. The recent sell-off provides a good long term opportunity. We retain an overweight rating.
Rural Funds Group (RFF)
Chart: Share price over the year
As a property trust with a diversified portfolio of Australian agricultural assets, Rural Funds is likely to remain largely immune from the impact of the Coronavirus. We expect RFF to generate a gradual increase in earnings and distributions in future years, which appeals in a difficult economic climate. We retain an overweight rating.
HOLD RECOMMENDATIONS
Nanosonics (NAN)
Chart: Share price over the year
Makes and distributes the trophon ultrasound probe disinfector. The Coronavirus isn’t expected to have any material impact on demand for NAN’s sterilisation device. An additional product is still likely to be launched in the near future. We have upgraded our recommendation to market weight after recent share price weakness.
Select Harvests (SHV)
Chart: Share price over the year
This almond grower and processor should benefit from a stronger crop yield this year. Also, almond prices appear to have stabilised, but at relatively low levels. The lower Australian dollar should provide pricing support. The shares appear fair value at these levels. We retain a market weight rating.
SELL RECOMMENDATIONS
Ramsay Health Care (RHC)
Chart: Share price over the year
The private hospital operator withdrew fiscal year 2020 guidance in March. The impact from reducing elective surgery due to the Coronavirus remains unclear. Given today’s technology, patients can be treated online at home, so this may reduce hospital admissions and potentially pressure margins in the future. Our recommendation is underweight.
Elmo Software (ELO)
Chart: Share price over the year
ELO is a cloud based software provider focusing on payroll and human resources. The company expects purchasing decisions to be deferred as a result of the Coronavirus. This may impact the company’s value if it leads to ELO operating at loss for longer than otherwise would have been the case. The company has substantial cash reserves, but we believe there’s better value elsewhere at this point. Our recommendation is underweight.
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.
