Michael Gable, Fairmont Equities
BUY RECOMMENDATIONS
Greencross (GXL)
Chart: Share price over the year versus ASX200 (XJO)
We recommended this veterinary clinic giant as a buy to thebull.com.au readers about a month ago when it was trading below $6. We believed it was oversold leading into full year results. With a recent top result showing impressive numbers, such as underlying net profit after tax up 77 per cent to $38.2 million, we believe a renewed focus on GXL will see it continuing to head higher. We now expect the stock to climb to almost $8 levels in coming months. GXL finished at $7.04 on August 12.
Chart: Share price over the year versus ASX200 (XJO)
This financial services company, which also owns the Radio Rentals business, posted full year results in May. Revenue was up 25 per cent to $293.8 million and EBITDA was up 14.9 per cent to $53.9 million. After going ex dividend at the end of June, the stock drifted a little lower for a few weeks. It rebounded to longer term support and appears to be holding it very well. We expect TGA to head back to high $2 levels from its $2.54 close on August 12.
HOLD RECOMMENDATIONS
Bendigo and Adelaide Bank (BEN)
Chart: Share price over the year versus ASX200 (XJO)
Full year results were in line to marginally better than expected. The regional banks should continue to improve their competitive position in relation to the big four as regulations start to take their toll. BEN was oversold following its results. With further growth prospects and a healthy yield, we consider it to be worth holding at current levels.
ANZ Bank (ANZ)
Chart: Share price over the year versus ASX200 (XJO)
After announcing a capital raising, investors savaged the share price. On August 12, the bank finished at $29.50. On March 25, it was $37.19. At today’s levels, we believe ANZ is a good hold as the capital position has now been addressed amid an impressive and sustainable yield in future.
SELL RECOMMENDATIONS
Newcrest Mining (NCM)
Chart: Share price over the year versus ASX200 (XJO)
The gold miner broke through key resistance near $11 at the start of the year and then proceeded to run up strongly to $14.50. After pulling back in March, it tried to rally again but struggled to push through that $14.50 zone, rounding out a new top that made it vulnerable to a downside move. Now that it’s fallen beyond the March low on strong volumes, we expect to see NCM heading back towards $10. The stock was trading at $11.65 on August 13.
Monadelphous Group (MND)
Chart: Share price over the year versus ASX200 (XJO)
Avoiding mining services stocks for the past few years has saved us a lot of money. MND has once again started to make new lows for the year, and seeing it breach support near $8 has us concluding that it can now fall to the next level of support near $6. This represents the lows during the GFC. The shares were trading at $7.45 on August 13.
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Matthew Litchfield, PhillipCapital
BUY RECOMMENDATIONS
BHP Billiton (BHP)
Chart: Share price over the year versus ASX200 (XJO)
The share price of the world’s largest diversified resources company has been punished in response to weakening commodity prices. While commodity risk remains, BHP’s asset portfolio is diversified and more stable post the demerger of South32. The progressive dividend policy is based in US dollars and is typically paid in September.
Emerchants (EML)
Chart: Share price over the year versus ASX200 (XJO)
A prepaid payment solutions provider, it’s gaining traction with corporate bookmakers in Australia. It’s also diversifying and the business is now profitable after acquiring Store Financial Services in the UK. The Australian division is growing.
HOLD RECOMMENDATIONS
CSL (CSL)
Chart: Share price over the year versus ASX200 (XJO)
Shares in the biotechnology giant recently hit $100. The company has completed the acquisition of the Novartis flu business. CSL enjoys high barriers to entry. Also, it has a strong track record of turning research and development spending into real products, which deliver returns. The shares were trading at $93.33 on August 13.
APA Group (APA)
Chart: Share price over the year versus ASX200 (XJO)
Australia’s largest gas pipeline owner is well positioned for future growth. APA’s strong balance sheet allows for new investments and to fund dividend payments. APA is one of four companies bidding for the Northern Territory link, which should be finalised by September.
SELL RECOMMENDATIONS
Orica (ORI)
Chart: Share price over the year versus ASX200 (XJO)
The profit report for this commercial explosives company missed market expectations and, accordingly, the stock price fell. Other negatives include asset write-downs and miners focusing on stripping out costs. ORI continues to operate within challenging conditions. There are better opportunities elsewhere.
Whitehaven Coal (WHC)
Chart: Share price over the year versus ASX200 (XJO)
The company reported a full year net loss after significant items of $342.7 million. The net loss before significant items was $10.7 million. In our view, investors should cut exposure to this most disappointing performer, as demand for metallurgical coal is relatively weak as China’s growth slows. Our research suggests the current value of WHC is overvalued. The shares were trading at 99 cents on August 13.
Simon Herrmann, wise-owl.com
BUY RECOMMENDATIONS
Freelancer (FLN)
Chart: Share price over the year versus ASX200 (XJO)
Revenue continues to increase at high double digit rates. In April, Freelancer acquired payment service provider Escrow.com for $US7.5 million funded from a $A10 million placement, which was raised at a premium to market. The acquisition of Escrow.com and the launch of a new business arm Local Jobs underlines management’s effort to pursue growth opportunities.
Charter Hall Group (CHC)
Chart: Share price over the year versus ASX200 (XJO)
A capital raising and the general market pullback have sent this property development and investment company lower during the 2015 second quarter. The proceeds from the capital raising are being used to fund equity investments and to provide capacity for future co-investments. Increasing trading volumes recently indicate technical support as the stock price consolidates at the lower end of its long term ascending channel.
HOLD RECOMMENDATIONS
Ardent Leisure Group (AAD)
Chart: Share price over the year versus ASX200 (XJO)
Owns theme parks, gymnasiums and other leisure facilities. It recently broke out of a medium term technical downtrend. We are attracted to AAD’s diversified portfolio, growth potential and exposure to the US, which generally benefits from a weak Australian dollar. AAD pays an attractive dividend, which was recently yielding 5.5 per cent. We retain our hold recommendation.
Challenger (CGF)
Chart: Share price over the year versus ASX200 (XJO)
Strong retail annuity sales and growing funds under management reflect CGF building a leading retirement income platform. Challenger generates modest growth across most divisions and management aims to reward shareholders with an attractive dividend. A long term hold.
SELL RECOMMENDATIONS
Nine Entertainment Co. Holdings (NEC)
Chart: Share price over the year versus ASX200 (XJO)
The media sector has underperformed the broader market. Nine was recently trading at its lowest level since listing and we see little to no upside catalysts in the short term unless financial results surprise on August 27.
Money3 Corporation (MNY)
Chart: Share price over the year versus ASX200 (XJO)
We remain bearish about this company that provides short term loans. Even though financial performance is expected to be solid, investor sentiment towards the sector remains negative. The stock was recently falling on high trading volumes. The shares were trading at $1 on August 13.
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.
