John Athanasiou, Red Leaf Securities
BUY RECOMMENDATIONS
Adherium (ADR)
Chart: Share price over the year
ADR is a digital health solutions provider. It develops, makes and supplies a broad range of connected medical devices for respiratory medications used by patients and issued by healthcare providers. ADR products can assist asthmatics, or those suffering from chronic obstructive pulmonary disease to manage their condition more conveniently, which may be useful during this pandemic period. Consequently, we expect ADR to benefit during these trying times.
BetaShares Crude Oil Index ETF-Currency Hedged (OOO)
Chart: Share price over the year
This exchange traded fund provides an opportunity to invest in crude oil without taking on company specific risk. We see minimal currency risk with this ETF, as it’s hedged against the US dollar. We believe the West Texas Intermediate crude oil price recently bottomed, so this ETF is a good option, but only for those with an appetite for risk. The price of this ETF has plunged, particularly after the Coronavirus spread across the globe.
HOLD RECOMMENDATIONS
EML Payments (EML)
Chart: Share price over the year
This payment solutions provider recently acquired Prepaid Financial Services (Ireland) for a steep discount following frantic renegotiations. The market was impressed, but there’s no need to rush in and buy now. In our view, investors should wait and see if EML can successfully integrate PFS into its business before making a decision to buy more or sell some.
Macquarie Group (MQG)
Chart: Share price over the year
This financial services provider hasn’t escaped the sell down, with its shares falling from a 12 month high of $152.35 on February 20 to close at $96.96 on April 23. The company found buyer support after recording its 12 month low of $70.45 on March 23. In our view, the shares have held up relatively well in difficult times. The company has an enviable track record of profitability, even though analysts are predicting a profit fall at its next full year result. The company reports on May 8.
SELL RECOMMENDATIONS
Afterpay (APT)
Chart: Share price over the year
This buy now, pay later company has been on a roller coaster ride. The shares fell from a 12 month high of $41.14 on February 20 to a 52 week low of $8.01 on March 23. The shares closed at $27.15 on April 23. We feel its recent share price recovery has been excessive. Investors should consider locking in some profits. We believe opportunities will arise to buy the stock at a cheaper price given market volatility.
G8 Education (GEM)
Chart: Share price over the year
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The childcare centre operator’s balance sheet is stronger after successfully completing an institutional capital raising. But going forward, we believe demand for childcare services could soften as more parents work from home, and the unemployed look for work. Best to avoid the sector until a clearer picture emerges.
Stuart Bromley, Medallion Financial Group
BUY RECOMMENDATIONS
PointsBet Holdings (PBH)
Chart: Share price over the year
A corporate bookmaker with operations in Australia and the US. A nationwide ban on online sports betting in the US was lifted in 2018. PointsBet provides exposure to this rapidly growing, multi-billion dollar market. After a $122.1 million capital raising, PBH is cashed up and ready to expand further in the US, as additional states continue to legalise online sports betting. We believe PBH offers a bright outlook.
PolyNovo (PNV)
Chart: Share price over the year
Designs, develops and makes dermal regeneration solutions using its NovoSorb biodegradable polymer technology. First half 2020 sales of NovoSorb were 129 per cent higher on the prior corresponding period to $8.57 million. The company is selling in Europe after receiving CE Mark approval. We’re most encouraged by the research and development pipeline.
HOLD RECOMMENDATIONS
Nanosonics (NAN)
Chart: Share price over the year
NAN’s ultrasound probe disinfection devices deliver the highest standards of sterilisation and efficiency. We’re also encouraged by the strong performance of consumables, which is likely to ensure continuing spending from existing customers. New product development provides substantial upside potential, which justifies the recent and relatively high price/earnings ratio.
Saracen Mineral Holdings (SAR)
Chart: Share price over the year
In our view, this gold producer provides an effective hedge against downward movements in the market. The company is growing its footprint rapidly, with production guidance of 500,000 ounces in fiscal year 2020 forecast to climb to 600,000 ounces in 2021. Saracen is stepping up to the next level of Australian gold producers.
SELL RECOMMENDATIONS
Flight Centre Travel Group (FLT)
Chart: Share price over the year
A $700 million capital raising should enable FLT to make it through the Coronavirus storm. But, in our view, it will be a long road to recovery with anticipated loses in fiscal years 2020 and 2021. We prefer to look at other companies trading at large discounts and with far less exposure to the Coronavirus.
Myer Holdings (MYR)
Chart: Share price over the year
The department store chain closed its doors on March 29 in response to the Coronavirus. The physical stores will remain shut at least until May 11. The 2020 half year report revealed growing online sales, but they only accounted for 10.5 per cent of total sales. The company has been a disappointing performer for years and the Coronavirus has left MYR with even more challenges ahead.
Tony Locantro, Alto Capital
BUY RECOMMENDATIONS
Computershare (CPU)
Chart: Share price over the year
This share registry company expects earnings per share in fiscal year 2020 to fall about 20 per cent on the prior corresponding period. Global interest rate cuts are having an impact. But we believe a likely increase in capital raisings in Australia and overseas will generate demand for the company’s services. The shares have fallen from $17.40 on February 20 to trade at $10.70 on April 23. We believe a weaker share price provides a buying opportunity.
South32 (S32)
Chart: Share price over the year
The miner produces bauxite, alumina, nickel, zinc, manganese and metallurgical coal in Australia, southern Africa and South America. The Cannington mine in Queensland is one of the world’s largest producers of silver and lead. The miner’s diverse commodity suite provides upside potential. The weaker share price appeals as a buying opportunity. The shares were trading at $1.87 on April 23.
HOLD RECOMMENDATIONS
PharmAust (PAA)
Chart: Share price over the year
This clinical stage oncology company’s lead anti-cancer drug candidate is monepantel. PharmAust has entered into a materials transfer agreement with the Walter and Eliza Hall Institute of Medical Research (WEHI) in Melbourne. Under the agreement, PharmAust will provide monepantel and monepantel sulfone to WEHI. It will test the effects of monepantel on COVID-19 infections. PAA will own all intellectual property results and rights generated from the studies.
Dimerix (DXB)
Chart: Share price over the year
This clinical stage biopharmaceutical company has two phase 2 studies underway. They include chemokine receptor blocker DMX-200 for both diabetic kidney disease and focal segmental glomerulosclerosis. DXB says the phase 2 clinical studies remain on track and on budget, with data read out expected in mid 2020. The share price has been volatile, but has held up relatively well during the current market rout. The shares were trading at 18.5 cents on April 23.
SELL RECOMMENDATIONS
Genworth Mortgage Insurance Australia (GMA)
Chart: Share price over the year
Risks remain in the Australian property sector, with auctions and sales significantly impacted by the Coronavirus. We expect the mortgage market to come under immense pressure in response to higher unemployment and a weaker economy. Consider selling for better opportunities elsewhere.
National Australia Bank (NAB)
Chart: Share price over the year
The bank recently warned it would take a first half earnings hit of $1.14 billion in response to a net increase in provisions for customer related remediation, an investment impairment in MLC Life and software capitalisation changes. The impact will reduce the company’s capacity to retain dividends. The banking sector is expected to come under further pressure from economic and property related headwinds, which could cut dividends across the board. In our view, those in search of yield should look outside the financial sector.
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.
