18 Share Tips – 4th November 2024

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Harrison Massey, Argonaut

BUY RECOMMENDATIONS

BUY – FireFly Metals (FFM)

The company has performed strongly since acquiring the Ming copper asset about 11 months ago. It’s currently in the middle of an exploration drill drive, with multiple rigs testing down plunge extents of the known resource. The asset has significant infrastructure and excellent ground conditions. FFM recently impressed with a 42 per cent increase in its mineral resource estimate, which now stands at 1.2 million tonnes of contained metal at 2 per cent copper equivalent. I own shares in FFM.

BUY – Blinklab (BB1)

Blinklab is a biotechnology company developing a smartphone-based application to aid in the diagnoses of autism and ADHD (attention deficit hyperactivity disorder) in young children. Autism Spectrum Disorder (ASD) affects one in 36 children in the US alone, so it has a significant addressable market. The company will initiate its US Food and Drug Administration autism study in the US later this year. BB1 is led by Brian Leedman, who sold a similar smartphone-based application to biopharmaceutical giant Pfizer. I own shares in BB1.

HOLD RECOMMENDATIONS

HOLD – Qantas Airways (QAN)

Qantas shares have rallied in 2024 on the back of strong domestic travel profitability and weakening crude oil prices. The shares have risen from $5.35 on January 2 to trade at $8.03 on October 31. The airline is enjoying stable travel demand for the first time in many years. If it can continue to deliver solid international travel figures, the share price should hold up. The consensus is the airline will re-instate a dividend as early as the first half of fiscal year 2025.

HOLD – Liontown Resources (LTR)

Production is ramping up at the Kathleen Valley lithium project. LTR recently shipped its maiden spodumene concentrate from Kathleen Valley and completed initial spot sales. Supressed lithium prices make it difficult to see any immediate share price appreciation. But we suggest holding LTR as it’s well placed to take advantage of the lithium market when it rebounds.

SELL RECOMMENDATIONS

SELL – Guzman Y Gomez (GYG)

GYG is a Mexican themed restaurant chain. The company had 220 restaurants operating in Australia, Singapore, Japan and the US as at June 30, 2024. Shares were issued in the initial public offering at $22 and the company listed on the ASX on June 20, 2024. The shares were trading at $37.26 on October 31. The stock was recently included in the S&P/ASX 200 index, which has assisted the share price. In our view, it may be an opportune time to trim exposure at these elevated share price levels.

SELL – Bank of Queensland (BOQ)

The bank delivered statutory net profit after tax of $285 million in fiscal year 2024, an increase of 130 per cent on the prior corresponding. But cash earnings after tax of $343 million fell 24 per cent. Lending competition, high funding costs, inflation and investment in risk, compliance and technology contributed to the cash profit decline. Possible interest rate reductions in Australia soon may impact BOQ more than the big four major banks.

Elio D’Amato, Stockopedia

BUY RECOMMENDATIONS

BUY – Redox (RDX)

Redox imports and distributes chemicals, ingredients and raw materials. It listed on the ASX in July 2023, but is a mature company with a 60-year history. The business is dominated by the Coneliano family, which hold about 50 per cent of the shares on issue. The stock generates a return on capital above 20 per cent. The company generates about 85 per cent of sales in Australia. Redox anticipates volume growth at or above the historical average in fiscal year 2025. We regard RDX as a high quality company.

BUY – Fiducian Group (FID)

FID is a diversified financial group. The company generated $13.51 billion in funds under management, advice and administration in fiscal year 2024, up 10 per cent on the prior corresponding period. Gross margins are 75 per cent, which means most of the costs are fixed, resulting in a high proportion of additional revenue flowing to the bottom line. We rate the stock highly in terms of quality. The shares have performed strongly in calendar year 2024, and we expect favourable momentum to continue moving forward.

HOLD RECOMMENDATIONS

HOLD – WiseTech Global (WTC)

WiseTech develops software for the global logistics industry. The company is performing well. It’s easy to forget, the company surprised the market with a strong outlook at its recent full year result, which delivered an operating margin of 36.55 per cent and increasing profitability. The share price has been recently recovering in a company that has successfully built a strong customer network.

HOLD – Bisalloy Steel Group (BIS)

Bisalloy makes high tensile and abrasion resistant quenched and tempered steel plate. The company delivered operating EBITDA of $26.7 million in fiscal year 2024, up 16.1 per cent on the prior corresponding period. Net profit after tax of $16.2 million was up 20 per cent. Perhaps the share price is being held back by an anti-dumping case raised by the company, but was still unresolved as at October 31, 2024, and a slowdown in Chinese domestic demand, which may impact global steel prices and margins.

SELL RECOMMENDATIONS

SELL – ALS Limited (ALQ)

The company provides analytical data testing services to a wide range of industries across the world. ALQ’s share price has remained resilient despite many companies it serves suffering weaker cash flows. In a recent first half trading update for fiscal year 2025, ALQ announced it had encountered volume headwinds within the minerals division. It expects underlying net profit after tax to be down by about 5 per cent when compared to the prior corresponding period. We believe analysts remain too optimistic about the outlook for ALQ’s customers.

SELL – Goodman Group (GMG)

This integrated industrial property company is a top operator. Its strategy of branching out into data centres has been a masterstroke that’s yielded strong returns in recent times. The shares have risen from $21.67 on November 2, 2023, to trade at $36.66 on October 31, 2024. According to our analysis, GMG rates highly in terms of quality and momentum. Competitors offer more potential upside from here. We suggest investors consider pocketing some profits at these levels.

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Tony Locantro, Alto Capital

BUY RECOMMENDATIONS

BUY – Talisman Mining (TLM)

The diversified explorer has a 1 per cent uncapped iron ore royalty from the Wonmunna project owned by Mineral Resources in Western Australia. The royalty generated $8.6 million for TLM in fiscal year 2024 and $2.5 million in the September quarter of 2024. This underpins the high risk but high reward exploration program at the Lachlan project in New South Wales and the Mabel Creek project in South Australia. The company has $5.8 million in the bank and no debt. Exploration drilling may unlock value for investors with an appetite for risk.

BUY – Far East Gold (FEG)

This copper and gold explorer has six advanced projects in Australia and Indonesia. FEG announced it was initially acquiring 51 per cent of the high grade Idenburg gold project in the Papua province of Indonesia, with the option of moving to 100 per cent. In June 2024, Idenburg had an independent exploration target of 7.2 million ounces at 6.1 grams a tonne of gold. Drilling is expected to resume at the Woyla gold project. Data will be reviewed on previous drilling of more than 20,000 metres. FEG has attracted a strategic investment of about $14 million from Xingye to fund an aggressive exploration program targeting high grade gold. We regard FEG as highly speculative, but it offers potential.

HOLD RECOMMENDATIONS

HOLD – Mayfield Group Holdings (MYG)

Mayfield provides electrical and telecommunication solutions across Australia’s power infrastructure. The company generated revenue of $85.7 million in fiscal year 2024, up 10.1 per cent on the prior corresponding period. Profit from ordinary activities after tax of $5.1 million was down 12 per cent. The order book remains strong through to 2026. We expect the company to generate growth via artificial intelligence across multiple industries, particularly data centres, where MYG’s expertise enables them to operate more efficiently.

HOLD – Nyrada Inc. (NYR)

Nyrada is a drug development company. The company’s lead candidate drug is NYR-BI03. The lead candidate has provided pre-clinical efficacy in neuro and cardio protection. In a pre-clinical rat trial, NYR-BI03 prevented loss of function resulting from myocardial ischemia-reperfusion injury following a heart attack in rats. NYR is on track to initiate a first in-human phase 1 clinical trial by the end of calendar year 2024. Investing in biotechnology companies involves significant risk, but exposes shareholders to potentially immense rewards.

SELL RECOMMENDATIONS

SELL – WiseTech Global (WTC)

WTC develops and provides software solutions to the global logistics industry. The company’s financial performance has been strong. Total revenue of $1.041 billion in fiscal year 2024 was up 28 per cent on the prior corresponding period. Statutory net profit after tax of $262.8 million was up 24 per cent. The shares have risen from $99.37 on October 24 to trade at $117.04 on October 31. After a rapid rise in a short time, the shares appear expensive and provide another opportunity to lock in some profits.

SELL – Wesfarmers (WES)

This industrial conglomerate has a diverse portfolio of quality businesses. WES generated revenue of $44.189 billion in fiscal year 2024, an increase of 1.5 per cent on the prior corresponding period. Net profit after tax of $2.557 billion was up 3.7 per cent. Hardware giant Bunnings Group grew total sales by 2.3 per cent, while Kmart Group total sales were up 4.1 per cent. Total sales at Officeworks grew by 2.3 per cent. High interest rates and soaring cost of living increases present challenges in sustaining performance. It might be prudent to cash in some gains at these share price levels.

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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.