18 Share Tips – 27th January 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 Jonathan Tacadena of MPC Markets, Angus Geddes of Fat Prophets 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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Jonathan Tacadena, MPC Markets

BUY RECOMMENDATIONS

BUY – Vulcan Energy Resources (VUL)

Listed on the ASX in 2018, Vulcan Energy is building the world’s first carbon neutral, integrated lithium and renewable energy business to help decarbonise battery production. Its Lionheart project, in Germany’s Upper Rhine Valley, is Europe’s biggest lithium and geothermal resource. Vulcan uses a two-step process powered by renewable energy to produce lithium for battery makers, while supplying green energy to the grid. An institutional placement recently raised $A164 million at $5.85 a share. The proceeds will go towards executing phase one of the Lionheart project. We believe the company offers value given its bright outlook.

BUY – Andean Silver (ASL) 

This Australian company is focusing on its Cerro Bayo silver-gold project in southern Chile. The company will operate its biggest ever geophysics exploration campaign using modern techniques for the first time in more than 15 years. Work will be conducted across 300 square kilometres and is expected to finish in six months. In 2024, ASL increased the resource estimate from 25 million ounces of silver equivalent to 91 million ounces. A maiden resource announcement is planned in the first quarter of calendar year 2025. Investors may want to consider buying the stock at what we believe is good value ahead of any key news announcements.

HOLD RECOMMENDATIONS

HOLD – Origin Energy (ORG) 

Australia Pacific LNG revenue of $2.638 billion in the September quarter of 2024 was up 1 per cent on the prior quarter, driven by higher LNG sales volumes. Electricity sales volumes increased 3 per cent on the prior corresponding period in response to more retail customers and higher demand. ORG has a stake in Octopus Energy, which generated strong customer growth in the quarter, adding more than 600,000 new customer accounts in the UK and international retail businesses. In 2024, ORG performed well as a hedge against inflation, but with the share price nearing analyst targets, we believe it’s best to hold for now. The shares have risen from $8.28 on January 25, 2024, to trade at $11.20 on January 23, 2025.

HOLD – Insurance Australia Group (IAG) 

IAG is a leading general insurer in Australia and New Zealand, offering personal and commercial insurance through various brands. Its recent acquisition of RACQ is expected to boost earnings by around 4 per cent in fiscal year 2026, with opportunities to add smaller motoring organisations in the future. In 2024, IAG and other insurance stocks performed well, benefiting from the ability to pass on higher costs to customers. With inflation showing signs of easing, we believe it’s a good time to hold IAG shares.

SELL RECOMMENDATIONS

SELL – JB Hi-Fi (JBH) 

This consumer electronics giant is a top performer. It continues to generate sales growth and, accordingly, investors have reacted positively to the stock. The shares have risen from $57.44 on January 25, 2024, to trade at $98.48 on January 23, 2025. In our view, the shares are priced to perfection, leaving little or no room for error. The stock is trading at premium valuations compared to its peers. Any downturn in what is widely considered a subdued economy could negatively impact the shares. Investors may want to consider cashing in some gains.

SELL – Westpac Banking Corporation (WBC)

WBC and other major Australian banks have benefited from strong fund flows from superannuation funds and exchange traded funds due to their heavy index weighting. However, after recent gains, dividend yields have fallen, and the earnings outlook appears pressured given stronger competition. In our view, Westpac’s shares, in particular, appear overvalued in this challenging and recently rising bond yield environment. The shares have risen from $23.70 on January 25, 2024, to trade at $32.895 on January 23, 2025.

Angus Geddes, Fat Prophets

BUY RECOMMENDATIONS

BUY – Evolution Mining (EVN)

Elevated gold prices are driving strong financial results for this miner by delivering record metrics and a return to positive cash flow in fiscal year 2024. Statutory net profit after tax of $422 million in full year 2024 was up 158 per cent on the prior corresponding period. Operating mine cash flow was up 63 per cent. The company has reinforced its positive momentum in fiscal year 2025. Copper’s constrained supply amid growing demand offer further upside. Evolution’s gold-copper asset mix is well positioned to capitalise on higher spot prices.

BUY – Ansell (ANN)

Ansell makes personal protection equipment for healthcare and industrial workplaces. The company’s recovery is gaining traction, with industry de-stocking mostly behind it. The company’s low capital expenditure requirements and progress in integrating the Kimberly-Clark personal protective equipment business establishes a meaningful build-up of capital in coming years. The acquisition provides options for further deals, or a return of more capital to shareholders.

HOLD RECOMMENDATIONS

HOLD – Sonic Healthcare (SHL)

Sonic is one of the largest providers of pathology and clinical laboratory services in the world. The COVID-19 pandemic hangover has faded, and management has continued to make value accretive acquisitions courtesy of a robust balance sheet. We see significant scope to lift margins from recent levels, which, combined with top line growth, could lead to earnings growth during the next two years, thereby generating increasing investor interest in this stock.

HOLD – SRG Global (SRG)

SRG is a diversified infrastructure services company. The company has delivered a stellar performance during the past year, driven by strategic execution and strong contract wins. While some of the recent upside has been realised, the company’s transformation continues to gain traction. A key acquisition has enhanced its business mix that’s supported by a robust project pipeline and backlog. The company’s share price has risen from 65 cents on January 24, 2024, to trade at $1.44 on January 23, 2025. The company continues to enjoy favourable momentum.

SELL RECOMMENDATIONS

SELL – Orora (ORA)

The company recently announced it had completed the sale of its North American packaging solutions business. The enterprise value of the transaction was $1.775 billion. The sale provides ORA with balance sheet flexibility, but it still faces headwinds, in our view. Fiscal year 2025 earnings are weighted towards the back half amid European volume pressures and furnace issues. Investor sentiment has cooled. In the absence of significant merger and acquisition interest, the stock lacks catalysts, in our view. We see better opportunities elsewhere.

SELL – Eagers Automotive (APE)

Eagers is an automotive retail group operating in Australia and New Zealand. Revenue of $5.5 billion in the first half of fiscal year 2024 was up 13.4 per cent on the prior corresponding period. However, underlying operating profit before tax of $182.5 million fell from $207.4 million in the first half of fiscal year 2023. In our view, margins face pressure from original equipment manufacturers flooding the market. The entry of more Chinese electric vehicles in 2025 could spark a price war, further clouding the outlook.

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Toby Grimm, Baker Young

BUY RECOMMENDATIONS

BUY – Iluka Resources (ILU)

Negative sentiment has continued to surround Iluka’s highly strategic Eneabba rare earths project, despite ILU securing $400 million in additional funding from the Australian Government. The company operates a world class mineral sands business and is set to benefit from a gradual recovery in the Chinese property market and resilience in other end markets through 2025. Production of 496,000 tonnes of zircon, rutile and synthetic rutile in full year 2024 exceeded guidance of 455,000 tonnes.

BUY – Newmont Corporation (NEM)

Newmont is the world’s biggest gold mining company. It also produces copper, silver, zinc and lead. The share price has fallen from $87.35 on October 23, 2024, to trade at $66.34 on January 23, 2025. We believe recent share price declines overstate minor production misses and accelerated cost inflation seen in recent quarters. Newmont is making excellent progress in selling higher cost operations, which will improve the balance sheet and enhance margins amid expectations of sustained elevated gold prices in 2025.

HOLD RECOMMENDATIONS

HOLD – IDP Education (IEL)

The company provides international student placements. It co-owns the world’s most popular English language tests. Restrictions on student and other migrant visas across key markets, including Australia, Canada and the UK, have weighed heavily on IDP’s share price since 2023. While remaining a headwind for sentiment in the short term, IDP has operationally outperformed industry peers in tough conditions and is likely to emerge a stronger global leader in a structurally attractive industry. The company posted record revenue of $1.037 billion in fiscal year 2024, up 6 per cent on the prior corresponding period.

HOLD – Elders (ELD)

Elders is an Australian agribusiness. The company raised capital to acquire the Delta Agribusiness for an enterprise value of $475 million. Delta provides rural products and advisory services through a network of 68 locations and about 40 independent wholesale customers. The acquisition should generate synergies and strategic benefits. Shares in Elders have fallen from $8.83 on November 8, 2024, to trade at $6.985 on January 23, 2025. We see reasonable long-term value and potential corporate appeal in this dominant rural products and services stalwart.

SELL RECOMMENDATIONS

SELL – Fisher & Paykel Healthcare Corporation (FPH)

FPH makes medical devices to treat obstructive sleep apnoea. While this New Zealand based medical products developer has established a quality name in an attractive long term growth industry, we struggle to justify the stock recently trading on significantly higher earnings multiple than larger rival ResMed. We view the stock as overvalued on a relative and fundamental basis around current levels.

SELL – Qantas Airways (QAN)

A dearth of domestic competition and resilient passenger demand amid falling fuel costs and relatively modest investment in new aircraft have supported QAN’s balance sheet and profitability in recent years. However, we don’t believe these factors will persist over the longer term and view the stock as highly overvalued based on normalised future earnings. The shares have risen from $5.48 on January 25, 2024, to trade at $9.365 on January 23, 2025. Investors may want to consider cashing in some gains.

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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.