18 Share Tips – 2nd September 2024

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Jed Richards, Shaw and Partners

BUY RECOMMENDATIONS

BUY – Tasmea (TEA)

Tasmea outsources specialist trade skilled services to the mining, resources and industrial sectors. The company recently listed on the ASX. Pro forma revenue of $407 million in fiscal year 2024 was up 10.8 per cent on the prior corresponding period. Pro forma earnings before interest and tax of $54.8 million was up 27.4 per cent. TEA trades at a discount to comparable ASX-listed companies, and our $2.50 share price target. The shares were trading at $1.74 on August 29.

BUY – Ramsay Health Care (RHC)

RHC is Australia’s biggest private hospital operator. It also operates in the UK and Europe. The shares have fallen from $56.47 on March 6 to trade at $44.42 on August 29. In our view, the shares have been oversold. The company had a market capitalisation of more than $10 billion on August 29. The company is well managed, and we expect RHC to improve in fiscal year 2025.

HOLD RECOMMENDATIONS

HOLD – Amcor PLC (AMC) 

The global packaging giant’s share price has risen from $13.82 on April 30 to trade at $16.53 on August 29. The recent share price rally has met our price target, but we will keep monitoring performance for future earnings potential. The stock is defensive with consistent earnings, which appeals to investors in this volatile market environment.

HOLD – ASX Limited (ASX) 

The financial markets operator posted a statutory net profit after tax of $474.2 million in fiscal year 2024, an increase of 49.4 per cent on the prior corresponding period. Operating revenue of $1.03 billion was up 2.4 per cent. The ASX holds a monopoly position in financial markets. The shares have risen from $56.45 on June 14 to trade at $61.53 on August 29. If the stock exceeds $64, then investors may want to consider reducing their holdings and pocketing a profit.

SELL RECOMMENDATIONS

SELL – National Australia Bank (NAB)

The shares have risen from $30.86 on January 2 to trade at $37.89 on August 29. Revenue from ordinary activities was down 3.8 per cent in the first half of fiscal year 2024, when compared to the prior corresponding period. Net profit after tax fell 11.9 per cent. This may be an opportune time to take some profits by reducing exposure to banks, particularly if investors are over-exposed to the broader sector.

SELL – Suncorp Group (SUN)

This share price of this insurance giant has risen from $13.73 on January 2 to trade at $17.485 on August 29. Group net profit after tax was up 11.8 per cent in fiscal year 2024 when compared to the prior corresponding period. Our concern is increasing premiums across the sector may tempt policy holders to drop or reduce their coverage. Historically, the share price has been volatile. Investors may want to consider cashing in some gains as we believe the stock is trading at a premium at these levels.

Arthur Garipoli, Seneca Financial Solutions

BUY RECOMMENDATIONS

BUY – BHP Group (BHP)

The global miner posted a 3 per cent increase in revenue in fiscal year 2024 when compared to the prior corresponding period. However, profit after tax was down 39 per cent. The share price has fallen from $50.54 on January 2 to trade at $40.335 on August 29. Investors have been concerned about softer iron ore prices and slowing growth in China. We believe the shares have been oversold. In our view, the weaker price provides an attractive entry level for the long term and an opportunity to collect the final dividend.

BUY – PointsBet Holdings (PBH)

This online corporate bookmaker recently reported numbers in fiscal year 2024 that were in line with forecasts. Group net revenue was up 17 per cent on prior corresponding period. The gross profit margin improved to 52.8 per cent. The company has operations in Australia and Canada. It expects revenue to grow in fiscal year 2025. It also expects to be cash flow breakeven.

HOLD RECOMMENDATIONS

HOLD – PEXA Group (PXA)

PEXA operates a leading digital property exchange platform and settles most transactions in Australia. The company lifted statutory revenue by 20.7 per cent in fiscal year 2024 when compared to the prior corresponding period. Operating EBITDA was up 16.4 per cent. A key catalyst for PXA is the expectation of contract wins from the UK division.

HOLD – HUB24 (HUB)

This financial services company provides platform solutions to the Australian wealth sector. In fiscal year 2024, the group increased statutory net profit after tax by 24 per cent on the prior corresponding period and underlying NPAT grew by 15 per cent. Total funds under administration were up 30 per cent. Increasing operating leverage moving forward remains a key positive for the business. While the valuation looks stretched, we prefer HUB to its peers.

SELL RECOMMENDATIONS

SELL – Breville Group (BRG)

This kitchenware company increased revenue by 3.5 per cent in fiscal year 2024 compared to the prior corresponding period. Net profit after tax rose by 7.5 per cent. We acknowledge a positive result considering a tougher economic environment. The shares have risen from $27.53 on August 8 to trade at $33.08 on August 29. We view recent share price strength as a profit taking opportunity, as the valuation now seems excessive.

SELL – Bank of Queensland (BOQ)

The bank is simplifying its retail distribution channels. The bank announced it would convert all 114 of its owner managed branch network to corporate branches, which is expected to be completed by March 2025. Cutting 400 full time jobs will drive down costs. Executing these plans carries risk. A return on equity is expected to fall from 9.25 per cent to 8 per cent in fiscal year 2026. Other stocks appeal more at this stage of the cycle.

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BUY RECOMMENDATIONS

BUY – Paladin Energy (PDN)

Commercial uranium production resumed at the Langer Heinrich mine on March 30, 2024. The company will continue to ramp up commercial production in fiscal year 2025. I remain attracted to uranium’s longer term prospects as supply is starting to meet increasing demand. The share price has substantially retreated since May to the point I believe it’s been oversold and offers an attractive entry level. The shares were trading at $9.795 on August 29.

BUY – Resolute Mining (RSG)

I remain bullish on gold due to central banks buying more of it amid the prospect of lower interest rates. This gold producer’s second quarter report in fiscal year 2024 beat market expectations. Production is growing strongly and net cash is climbing. The stock has been trending higher and we expect more upside moving forward.

HOLD RECOMMENDATIONS

HOLD – BHP Group (BHP)

Commodity stocks are cyclical. This global miner has been trading near the bottom of the current cycle in response to investor concerns about Chinese and global growth. In my view, BHP is trading at a discount. I expect the stock to rally after the US cuts interest rates and when investors appreciate these historically cheap levels.

HOLD – Macquarie Group (MQG)

We expect capital markets to rebound in fiscal year 2025. This diversified financial services company should be a key beneficiary. I expect Macquarie’s banking and financial services segment to grow strongly and increase earnings. The stock chart remains strong, and the uptrend is still in place. The shares have risen steadily since August 5 to trade at $213.73 on August 29.

SELL RECOMMENDATIONS

SELL – Domino’s Pizza Enterprises (DMP)

Group network sales were up 4.6 per cent in fiscal year 2024 when compared to the prior corresponding period. Net profit after tax fell 1.9 per cent and net profit before tax was down 3.7 per cent. The stock has been in a long term downtrend. The shares have fallen $59.28 on January 2 to trade at $29.69 on August 29. The shares may remain under pressure as the fast food market is competitive. Other stocks offer more appeal, in my view.

SELL – Corporate Travel Management (CTD)

CTD is a leader in business travel management services. The company lifted revenue and other income by 9 per cent in fiscal year 2024 when compared to the prior corresponding period. Statutory net profit after tax was up 9 per cent. The shares fell following a result that was below forecasts. The shares have fallen from $12.51 on August 20 to trade at $11.76 on August 29. In my view, global travel spending may slow in fiscal year 2025.

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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.