18 Share Tips – 2nd June 2025

Welcome to this week’s edition of 18 Share Tips – our weekly selection of top ASX shares, chosen by leading analysts, that we think are worth considering.

This week Jabin Hallihan of Family Financial Solutions, Christopher Watt of Bell Potter Securities and Toby Grimm of Baker Young share their ‘Buy’, ‘Hold’ and ‘Sell’ recommendations.

Please note these share tips are simply recommendations and are in no way intended as financial advice.  These share tips are general advice and don’t take into account any individual’s financial situation. Investors are advised to seek professional financial advice before investing.

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Jabin Hallihan, Family Financial Solutions

BUY RECOMMENDATIONS

BUY – Kogan.com (KGN)

The online retailer grew sales and profit margins in the four months to April 30, 2025. Gross sales growth at Kogan.com was up 24.2 per cent compared to the prior corresponding period. Active customers increased to 2.7 million, up 38 per cent year-on-year. Investing in marketing to drive customer growth impacted adjusted earnings before interest and tax. In our view, the stock is undervalued, as we expect profit margins to improve moving forward.

BUY – Fineos Corporation Holdings PLC (FCL)

Fineos is a global software company. It provides software to the life, accident and health industries. FCL helps businesses streamline operations and migrate from outdated systems. The company is gaining momentum, securing major contracts with clients like Guardian and New York Life. Cash receipts from customers surged 40 per cent in the first quarter of fiscal year 2025 when compared to the prior corresponding period. In our view, FCL is undervalued given our share price target is $3.90. With positive free cash flow anticipated in fiscal year 2025, we expect FCL to benefit from industry tailwinds and increasing market share. The shares were trading at $2.39 on May 29.

HOLD RECOMMENDATIONS

HOLD – GrainCorp (GNC)

GrainCorp is a major agribusiness and processing company. The company reported strong financial results in the first half of fiscal year 2025, with underlying EBITDA of $202 million up from $164 million in the prior corresponding period. It was driven by handling 16 per cent more grain. GNC upgraded underlying EBITDA guidance to between $285 million and $325 million for the full year. The company increased its share buyback to $75 million. The 2024/25 harvest is one of the biggest in years, boosting production and short term earnings. GrainCorp remains fundamentally strong.

HOLD – Fortescue (FMG)

This leading iron ore producer supplies global steelmakers while investing heavily in clean energy. The company is aiming to become a major player in renewable energy through its Fortescue Future Industries division. Fortescue’s iron ore business remains strong, supported by global demand. It offers long term growth potential in clean energy, but near-term execution is uncertain, in our view. The shares are way off their highs and could easily move higher from these levels on positive news flow.

SELL RECOMMENDATIONS

SELL – REA Group (REA)

REA Group operates Australia’s biggest online property advertising platforms. The company generated revenue of $374 million in the third quarter of fiscal year 2025, up 12 per cent on the prior corresponding period. Revenue of $1.247 billion for the nine months ending March 31, 2025, was up 18 per cent. National new buy residential listings were flat year-on-year. However, listings in April declined 11 per cent year-on-year. The stock looks overpriced. The stock has risen from $221.92 on April 7 to trade at $245.70 on May 29. We believe the valuation is stretched in a subdued residential property market. We would recommend investors consider cashing in some gains to reduce risk.

SELL – JB Hi-Fi (JBH)

JBH is a consumer electronics giant operating in Australia and New Zealand. The company has established an enviable track record of success among discretionary retailers. JB Hi-Fi’s Australian operations grew total sales by 6.5 per cent in the third quarter of fiscal year 2025. Total JB Hi-Fi sales in New Zealand soared by 17.5 per cent. In our view, the company’s valuation appears stretched and offers limited upside from these levels. Given the stock’s premium pricing, we suggest investors consider selling a parcel of JBH shares and investing in Kogan.com, which is expanding market share at a more attractive valuation.

Christopher Watt, Bell Potter Securities

BUY RECOMMENDATIONS

BUY – Santos (STO)

The energy giant is fundamentally cheap, trading on a modest earnings estimate in fiscal year 2025 and a forecast dividend yield of about 6 per cent. The balance sheet is strong, with gearing at 18.7 per cent. Capital expenditure discipline was evident in first quarter results. Barossa LNG and Pikka Oil are tier one projects, delivering step change volume and margin expansion from fiscal year 2025 onwards. STO’s integrated model — linked gas, LNG, and oil — provides stable revenue across the cycles. With breakeven below $US35 a barrel and cash flows improving, Santos is positioned for capital returns and earnings growth.

BUY – BHP Group (BHP)

BHP remains Australia’s premier diversified miner. The business generates robust operating cash flow, which supports its strong balance sheet. The company generated record iron ore and copper production for the nine months ending March 31, 2025. Copper volumes are growing via optimisation at the Escondida mine. The Jansen potash mine adds future-facing exposure from fiscal year 2027. Western Australia iron ore margins remain above 60 per cent. With stable pricing and scale advantages, BHP offers long term earnings resilience and inflation protection.

HOLD RECOMMENDATIONS

HOLD – Coles Group (COL)

The retail giant remains a defensive core holding, underpinned by recurring supermarket earnings, which make up about 90 per cent of group earnings before interest and tax. The balance sheet is conservative, and strong free cash flow supports its recent fully franked dividend yield of about 3.3 per cent. Margin improvement relies on technology rollouts and cost-out initiatives, but near term upside appears priced in. Keep as a stable yield anchor, but we wouldn’t recommend adding stock to portfolios at these levels.

HOLD – Rural Funds Group (RFF)

RFF is an agricultural real estate investment trust. It holds more than $1.6 billion in agricultural property. Net asset value of $3.10 compared to a share price of $1.77 on May 29 reveals a significant discount. Adjusted funds from operations of 5.73 cents per unit is in line with full year forecasts and is underpinned by long dated leases to institutional-grade tenants. Execution on improving Western Australia macadamia farms and Northern Territory cattle stations could unlock future upside. In our view, the valuation is compelling, but we suggest waiting for a catalyst before adding to portfolios.

SELL RECOMMENDATIONS

SELL – Healius (HLS)

HLS is a diagnostic pathology company. After recently completing the sale of Lumas Imaging, HLS paid shareholders a special fully franked special dividend totalling about $300 million or 41.3 cents a share. In our view, earnings before interest and tax targets in fiscal year 2027 imply overly ambitious cost-outs. The return on capital in fiscal year 2026 is modest. The shares have fallen from $1.60 on May 7 to trade at 91.2 cents on May 29. In our view, other companies offer better returns and brighter prospects moving forward.

SELL – IGO Limited (IGO)

IGO owns and operates the Nova nickel operation, an underground mining and processing facility in Western Australia. Final production at Nova is expected in the December quarter of 2026. IGO also has lithium interests. The company has a joint interest in the Greenbushes lithium mine, but spodumene prices have been slashed in the past few years. Sales revenue of $111 million in the third quarter of fiscal year 2025 was down 16 per cent on the second quarter. Underlying EBITDA of $34 million was up from a $79 million loss in the second quarter. Net cash is positive, but capital expenditure requirements for refining assets is too high, in our view. We would be inclined to sell into recent share price strength. Better company outlooks exist elsewhere.

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Toby Grimm, Baker Young

BUY RECOMMENDATIONS

BUY – Goodman Group (GMG)

Goodman is a global industrial property group. News flow from international and domestic data centre customers and developers remains highly supportive. We believe the well-timed and successful completion of its $4 billion institutional placement underpins Goodman’s near-term investment requirements while maintaining relatively low debt levels. With the stock still trading at a discount on May 29 to its capital raising price of $33.50, we view weakness as a buying opportunity.

BUY – Chrysos Corporation (C79)

The company’s flagship product PhotonAssay analyses gold, copper, silver and other elements. The company recently entered into a master services agreement enabling Newmont Corporation to use PhotonAssay technology for its gold mining projects. The agreement with Newmont provides C79 a pathway to re-accelerate sales growth, which had slowed in recent quarters despite record gold prices. The agreement with Newmont further validates C79’s unique PhotonAssay technology.

HOLD RECOMMENDATIONS

HOLD – Nufarm (NUF)

Nufarm is a global crop protection and seed technologies company. In its first half 2025 result, seedtechnologies experienced a 71 per cent decline in earnings before interest and tax when compared to the prior corresponding period. The decline was due to lower licensing revenues, lower omega-3 margins and lower canola revenues in Australia. The disappointing seeds technologies performance overshadowed a far more encouraging performance from the core chemicals operations. Debt is high, in our view, and a capital raising may be required, but the share price reaction appears excessive. We wouldn’t be selling at this price. The shares have fallen from $4.02 on May 20, a day prior to the result, to trade at $2.36 on May 29.

HOLD – Endeavour Group (EDV)

Endeavour operates liquor outlets, hotels and gaming facilities. EDV’s third quarter trading update suggests operational and market headwinds are abating after resolving its distribution centre issues amid indications that retail demand has found a base. The company has appointed Jayne Hrdlicka as the group’s new managing director and chief executive officer, effective from January 1, 2026. Hrdlicka is well versed in corporate restructuring, mergers and acquisitions and adds conviction to our medium-term recovery thesis.

SELL RECOMMENDATIONS

SELL – Coles Group (COL)

The supermarket operator has performed admirably in the past 12 months. Its performance and defensive qualities may support the stock through to the end of the financial year, but it now trades at a premium of more than 30 per cent to our valuation. The shares have risen from $18.56 on March 20 to trade at $21.62 on May 29. We note that re-invigorated rival Woolworths recently signaled its intention to increase competitive pressure.

SELL – Perseus Mining (PRU)

This low-cost African gold producer has a strong balance sheet, which is enabling it to buy back shares even though they were recently trading at all-time highs. Nonetheless, we note PRU’s relatively short mine life, which will eventually require significant development or acquisitions. Consequently, this could materially change risks. We see superior value elsewhere in the sector and suggest investors consider taking profits at these levels. The shares have risen from $2.61 on January 2 to trade at $3.83 on May 29.

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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.