18 Share Tips – 5th August 2024

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Damien Nguyen, Morgans 

BUY RECOMMENDATIONS

BUY – Regal Partners (RPL)

RPL is a diversified manager spreading investments across a range of liquid listed equities and alternative strategies. A strong investment performance, fund inflows and acquisitions have resulted in the business significantly growing funds under management since June 2022. While difficult to forecast, we’re confident RPL can continue to grow funds under management as performance persists, which should lead to a re-rating of its share price.

BUY – BHP Group (BHP)

We view BHP as the best in class among large market capitalisation miners. Over the long term, BHP should benefit from having upgraded its operational and development activities in previous cycles. The company was recently trading on a fully franked dividend yield above 5 per cent. The share price at recent levels represents an attractive entry point.

HOLD RECOMMENDATIONS

HOLD – NextDC (NXT)

NXT is a data centre operator. The recent share price fall reflects a sell-off in large market capitalisation technical stocks in the US. However, NXT’s fundamentals remain solid and demand for its data centre services is strong. We suggest holding through this current volatility as demand from business digitisation and cloud adoption will only get bigger over time.

HOLD – Coles Group (COL)

Shares in this supermarket giant have risen from $15.35 on February 21 to trade at $18.27 on August 1. Despite current cost of living pressures, consumers continue to prioritise essentials above discretionary items. Supermarket sales revenue rose 5.1 per cent in the third quarter of fiscal year 2024 when compared to the prior corresponding period. COL’s fully franked dividend yield was recently about 3.3 per cent.

SELL RECOMMENDATIONS

SELL – Telstra Group (TLS)

The telecommunications giant was recently trading on what we consider a lofty price/earnings ratio compared to its 10 year average. The shares of risen from $3.42 on May 22 to trade at $3.945 on August 1. We believe this is an appealing exit point. In our view, other companies offer stronger growth prospects.

SELL – Fortescue (FMG)  

The iron ore giant recently announced it would simplify the company’s structure to remove duplication and deliver cost efficiencies. Iron ore guidance was weaker than expected for fiscal year 2025. Capital expenditure is likely to be higher, in our view. The shares have fallen from $29.39 on January 2 to trade at $19.03 on August 1. We believe the share price may struggle during the restructure, so other stocks appeal more at this stage of the cycle.

Tony Locantro, Alto Capital 

BUY RECOMMENDATIONS

BUY – Echo IQ (EIQ)

The company uses artificial intelligence to enhance detection of structural heart disease. In May, the company announced it had applied to the US Food and Drug Administration for market clearance of its AI-backed support tool to assist in the detection of aortic stenosis. The company’s objective is to generate revenue through reimbursements and strategic partnerships. The shares have risen from 10 cents on April 22 to close at 15.7 cents on August 1. EIQ is a highly speculative stock, in our view.

BUY – Eagle Mountain Mining (EM2)

EM2 is a copper explorer and development company. It has two projects in the US state of Arizona.  The company’s key objective is to become a low emissions producer and to supply the growing green energy market. Copper porphyry-style targets were recently confirmed at the Silver Mountain project. The shares closed at 5.5 cents on August 1. EM2 offers speculative upside for investors with a high risk tolerance.

HOLD RECOMMENDATIONS

HOLD – Triangle Energy (Global) (TEG)

The Booth-1 exploration well was recently spudded in the north Perth Basin. The Booth prospect consists of multiple oil and gas targets, with a total prospective resource range of between 113 billion cubic feet of gas and 540 billion cubic feet. The best estimate is 279 billion cubic feet of gas. TEG is also in discussions to secure a rig to drill the Becos oil prospect. Oil and gas exploration is a high risk, high reward play. The stock finished at 1.5 cents on August 1.

HOLD – Lion Selection Group (LSX)

LSX invests in emerging junior resource companies. LSX recently invested a further $5 million in Saturn Metals. LSX is targeting companies in a weaker resources sector, with the aim of generating capital growth. The size of its portfolio was $88.2 million at June 30, 2024. It had net cash of $56.8 million at June 30, 2024. The shares have been edging higher since March to close at 48 cents on August 1.

SELL RECOMMENDATIONS

SELL – Car Group (CAR)

This automotive classifieds advertising giant has wholly owned digital marketplaces in Australia, South Korea, the US and Chile. It is the majority shareholder of webmotors in Brazil. We’re concerned about a potentially weaker outlook for the technology sector and possibly increasing competition. The shares have risen from $29.97 on January 8 to close at $34.70 on August 1. The company is reporting its full year results on August 12. Perhaps, now is a good time to consider locking in some profits, as growth may be already factored into the share price.

SELL – Spartan Resources (SPR)

The company recently announced a major resource upgrade of 2.48 million ounces of gold at 4.79 grams a tonne. The upgrade represents a 47 per cent increase in ounces and 91 per cent in grade. The company had cash of $93 million at June 30, 2024. The shares have risen from 51 cents on January 2 to finish at $1.26 on August 1. Given the rapid rise, investors may want to consider locking in part profits.

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Angus Geddes, Fat Prophets

BUY RECOMMENDATIONS

BUY – James Hardie Industries PLC (JHX)

JHX is a building products maker operating in Australia, North America, Europe, New Zealand and the Philippines. JHX should benefit if the US Federal Reserve cuts interest rates. Elevated mortgage rates have subdued demand, with home buyers delaying plans. Housing inventory is low, so any cut in interest rate cuts is likely to generate an increase in home building and more repair and re-modelling work in the aged US housing market.

BUY – Evolution Mining (EVN)

Gold production of 212,070 ounces in the June quarter was up 14 per cent. Record quarterly group cash flow of $230 million was up 171 per cent on the March quarter. The company recently announced top results from step-out drilling at the Ernest Henry mine. Robust operational metrics provide a strong foundation for fiscal year 2025. I expect gold and copper prices to remain elevated, so there’s scope for further upward revisions for earnings and price estimates.

HOLD RECOMMENDATIONS

HOLD – Fortescue (FMG)  

A target to produce 15 million tonnes of green hydrogen a year by 2030 is contentious among investors and analysts, although the company remains committed to green technology. FMG recently announced a restructure, with the loss of 700 jobs from its global operations. This iron ore giant is adjusting to existing and near-term economic realities. We view this as a net positive for shareholders. We’re more upbeat than consensus views on the Chinese economy and housing market. While there’s substantial problems, Beijing is increasing its efforts to provide support, highlighted by the recent stimulus from the People’s Bank of China.

HOLD – Amcor PLC (AMC)

The global packaging giant has faced headwinds on the top line due to volume pressures across several segments. Nevertheless, the bulk of Amcor’s customers operate in relatively stable economic locations, and the destocking phase appears to be nearing an end. There was a sequential improvement in the last reported quarter. Input cost pressures are easing, and structural efforts to reduce costs paint a brighter outlook when demand improves.

SELL RECOMMENDATIONS

SELL – IDP Education (IEL)

The company provides international student placements. It faces headwinds due to more restrictive student visa policies in the UK, Australia and Canada, which may crimp the company’s earnings prospects. There’s a risk governments will focus more on permanent migration in coming years, possibly leading to long-term pressures on international student numbers. A potentially contracting market would likely spike competitive pressures and subdue the forward earnings profile.

SELL – Perpetual (PPT) 

The fund manager posted net outflows of $8.9 billion in the June quarter. That, combined with negative market movements, distributions and currency movements reduced total funds under management from $227.4 billion at the end of March 2024 to $215 billion at June 30, 2024. Outflows occurred across several brands. Meanwhile, the proposed sale of the wealth management and corporate trust businesses to KKR for $A2.175 billion has been criticised. If shareholders vote in favour of the deal, KKR ends up with the Perpetual brand that’s more than 130 years old.

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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.