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Philippe Bui, Medallion Financial Group
BUY RECOMMENDATIONS
Elmo Software (ELO)
Chart: Share price over the year
A rapidly growing company, providing cloud human resources, payroll, rostering and attendance management technology to more than 1100 companies. The company was founded in 2002, listed in 2017 and operates a software as a service model. Elmo grew its customer base by 31.4 per cent for the 12 months to December 2018. The company still has further room to grow, as it currently holds an estimated 9 per cent share of its addressable market.
Integrated Research (IRI)
Chart: Share price over the year
A leading global provider of performance monitoring and software diagnostics, particularly for companies operating business critical computing environments. Although the company’s share price has increased by more than 20 per cent in the past month, it remains a buy at current valuations, in our view. The trend remains strong and sentiment appears to have shifted to the upside since the February result and the recent appointment of new CEO John Ruthven.
HOLD RECOMMENDATIONS
Northern Star Resources (NST)
Chart: Share price over the year
A mid tier Australian based gold producer and explorer. The recent March quarter was marginally softer than analyst expectations due to cost increases associated with the transition of the Alaska based Pogo gold mine. However, over the long term, NST management has proven it can deliver on key metrics. Most Australian dollar gold producers have benefited from a falling Aussie against the US dollar, combined with increasing trade tensions and falling interest rate expectations. Australian dollar gold prices are near all time highs.
Nanosonics (NAN)
Chart: Share price over the year
Involved in making and distributing an ultrasound probe disinfector and its associated accessories. The share price has risen strongly since its February result and recently broke out of its trading range to move much higher. Despite somewhat high valuations, there’s potential growth within the space if NAN can successfully diversify into other areas of infection control and decontamination products.
SELL RECOMMENDATIONS
Domino’s Pizza Enterprises (DMP)
Chart: Share price over the year
Although growth in Japan is promising, challenges exist in Australasia and Europe. We see continuing pressure on margins for some time while the business transitions and moves poor performing franchise stores under the corporate umbrella.
IOOF Holdings (IFL)
Chart: Share price over the year
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An Australian financial services provider. The company may look cheap on traditional metrics. However, we see margin pressure within platform services and this could lead to further falls in earnings per share in coming years. The shares have fallen from $6.54 on May 1 to trade at $5.27 on June 20.
Michael McCarthy, CMC Markets
BUY RECOMMENDATIONS
Challenger (CGF)
Chart: Share price over the year
This financial products group is under share price pressure after guiding analysts’ profit estimates lower and trading at four year lows. However, one of its greatest successes over the past decade was higher yielding, capital stable products. As growth concerns mount and central banks leap into action, these products could represent a competitive edge for CGF. This may mean CGF earnings are at a turning point, and the share price could follow. The shares closed at $6.46 on June 20.
Afterpay Touch Group (APT)
Chart: Share price over the year
APT shares recently came under pressure after Australia’s financial intelligence agency AUSTRAC ordered this buy now, pay later company to appoint an external auditor to carry out an audit in respect to its anti-money laundering and counter-terrorism financing compliance. This stock has its fans and detractors, but buying in is always difficult given the uncertainty about future growth rates. However, the stock has partially recovered from recent lows to close at $23.49 on June 20.
HOLD RECOMMENDATIONS
BHP Group (BHP)
Chart: Share price over the year
It’s tempting to take profit in this global miner after breaching $40 a share. Iron ore was an important driver of share price gains. However, falls in copper and crude oil prices over the same period leave potential supporting commodity moves even if iron ore retraces. Longer term expansion plans at Olympic Dam provide BHP with options. The shares finished at $40.85 on June 20.
Commonwealth Bank of Australia (CBA)
Chart: Share price over the year
The banking giant provided opportunities for active investors during the past four years. Buying at $70 and selling at $80 yielded repeated opportunities, and some chunky dividends along the way. However, the surprise federal election result represents a positive shift in both the business and investment case for CBA. A test of the 2017 high near $87 could be on the cards. CBA shares closed at $82.89 on June 20.
SELL RECOMMENDATIONS
Fortescue Metals Group (FMG)
Chart: Share price over the year
Although an admirer of this business, the catch up in share price as iron ore prices rose recently pushed this iron ore producer to 11-year highs. At levels recently close to $9, FMG could be vulnerable to a significant correction. Active investors may seize the opportunity to take profits now and possibly buy back at lower levels. Shares in FMG finished at $8.72 on June 20.
EML Payments (EML)
Chart: Share price over the year
A successful organic and acquired European expansion has attracted a lot of interest in EML. The share price has doubled over the past four months. However, consensus earnings estimates halved over the past two years, leaving the stock to trade on a hefty price/earnings ratio. Given the high level of disruption in the payments space and lower barriers to entry, EML might be considered overbought.
Gavin Wendt, Minelife
BUY RECOMMENDATIONS
Centaurus Metals (CTM)
Chart: Share price over the year
Boosted by a recent $2.2 million equity raising, iron ore price strength and renewed interest from prospective project partners and off-takers, the company has recently committed to undertake an update of a previous feasibility study at its Jambreiro iron ore project in Brazil. The study will be based on significant changes and enhancements with respect to several key parameters, along with a strategic development review of the project. The pre‐feasibility study is targeted for completion by the end of June 2019. The shares finished at less than a cent on June 20.
PolarX (PXX)
Chart: Share price over the year
PXX has announced a major strategic earn-in joint venture with international miner, Lundin Mining, over selected porphyry copper-gold targets within its 100 per cent owned Stellar Claims in Alaska. Lundin will subscribe for 53.4 million shares in PXX at 8 cents for a 14.3 per cent stake. Recent 3D modelling has identified the Saturn prospect as a large, compelling copper‐gold porphyry target. PXX shares finished at 9.3 cents on June 20.
HOLD RECOMMENDATIONS
Poseidon Nickel (POS)
Chart: Share price over the year
The company’s current focus is its Silver Swan nickel sulphide project in Western Australia, where the latest drilling results continue to expand high grade nickel sulphide mineralisation, with the aim of ultimately resuming production. POS envisages that its encouraging exploration results will flow to a revised Silver Swan resource by the end of August 2019. The ultimate goal is a restart of mining at a combined Black Swan/Silver Swan operation.
Sipa Resources (SRI)
Chart: Share price over the year
The company has recently commenced an extensive SkyTEM airborne electro-magnetic survey at its Paterson North Copper-Gold Project in Western Australia’s Paterson Province. Since completing the 2018 field season, various developments have enhanced the significance of the company’s Obelisk discovery and surrounding tenement package. Most notable is confirmation of a significant copper-gold-silver discovery by Rio Tinto at Winu, about 10 kilometres west of SRI’s tenement holding.
SELL RECOMMENDATIONS
Liontown Resources (LTR)
Chart: Share price over the year
This emerging lithium play has been an outstanding success story, rising from a 12 month low of 1.9 cents a share to a recent high of 12.5 cents. Meticulous exploration work was undertaken at the company’s Kathleen Valley project in Western Australia. The latest drilling results have extended the high grade system for more than 900 metres of strike, including a thick 600 metre long feeder zone. Some long term holders might look to lock in some profits. The shares finished at 11 cents on June 20.
Walkabout Resources (WKT)
Chart: Share price over the year
A graphite success story. With approvals granted for its Tanzanian mining licences in the second half of 2018, WKT has accelerated project activity, culminating in resource and reserve upgrades that fed directly into a recent definitive feasibility study. The results demonstrate that grade is king, establishing the project as one of the world’s highest grade graphite projects and one of the lowest in terms of operating costs. The shares have soared this year, so long term holders might consider locking in some profits.
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.
