Simon Herrmann, wise-owl.com
BUY RECOMMENDATIONS
Myer Holdings (MYR)
Chart: Share price over the year
Solomon Lew’s Premier Investments has acquired a 10.77 per cent stake in Myer, which owns 67 stores across Australia and has an online digital and mobile platform. Premier Investments advised the ASX that it didn’t currently intend to make a takeover offer for MYR. While sales have been steady, a return to sustainable EBITDA growth is also driving the stock. A significant reduction in debt has improved the balance sheet. MYR is trading near an all time low. Although 16 per cent of stock had been recently shorted, we believe the company outlook is brighter. The shares were trading at $1.222 on March 30.
Collaborate Corporation (CL8)
Chart: Share price over the year
Owns DriveMyCar, a peer-to-peer car rental platform, enabling car owners to rent their vehicle to other people. Other businesses include MyCaravan and Mobilise. Management has demonstrated an ability to identify and leverage corporate partnerships, while successfully implementing risk mitigation strategies. The company is growing organically and is aiming to achieve critical mass.
HOLD RECOMMENDATIONS
InvoCare (IVC)
Chart: Share price over the year
Full year 2016 results revealed single digit revenue growth and double digit earnings growth. The company’s defensive business model of operating funeral homes, cemeteries and crematoria keeps on delivering. Management has a strong track record of creating value and distributing dividends.
Alice Queen (AQX)
Chart: Share price over the year
Offers exposure to gold and base metals through its exploration assets in Queensland and New South Wales. The recently announced Newcrest Mining joint venture validates management’s strategic exploration plan, and recent technical studies at its Horn Island project provide a foundation for demonstrating its economic potential. The company’s exploration activities are guided by John Holliday, who was the principal discoverer of Newcrest Mining’s Cadia Valley deposit.
SELL RECOMMENDATIONS
Quintis (QIN)
Chart: Share price over the year
The recent short selling campaign led to more volatility and cut the share price of this Indian sandalwood company. We like the company, but would reduce holdings until a clearer picture emerges following the recent resignation of managing director Frank Wilson.
OZ Minerals (OZL)
Chart: Share price over the year
We have recently downgraded to a sell, as OZ Minerals is a cyclical stock and subject to price volatility in the commodity space. OZ Minerals has a healthy balance sheet and its gold-copper mining and exploration projects have benefited from rising copper prices. However, a significant increase in its share price during the past 12 months represents a good exit point to take profits.
Mathan Somasundaram, Blue Ocean Equities
BUY RECOMMENDATIONS
Pureprofile (PPL)
Chart: Share price over the year
An online marketing and research company, PPL connects brands with empowered customers across the world through PPL and Cohort Holdings Australia’s direct-to-consumer technology platforms. PPL was recently trading on an undemanding fiscal year 2018 price/earnings multiple of 6 times. Our analyst Gregg Taylor has a price target of $1.15. The shares were trading at 40 cents on March 30.
NetComm Wireless (NTC)
Chart: Share price over the year
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We believe NTC remains on track to triple revenue over three years just from its existing machine-to-machine (M2M) contracts. In our view, the market isn’t factoring in a potential US business. Our analyst Philip Pepe has a price target of $4. The shares were trading at $1.545 on March 30.
HOLD RECOMMENDATIONS
Navitas (NVT)
Chart: Share price over the year
The Commonwealth Department of Education and Training has proposed reducing the number of contract regions to deliver the Adult Migrant English Program (AMEP) from July 1, 2017. However, NVT has been recommended as a preferred tenderer and remains a leading global education provider. Our analyst Philip Pepe has a price target of $4. The shares were trading at $4.335 on March 30.
Telstra (TLS)
Chart: Share price over the year
The telecommunications giant was recently trading on a grossed up dividend yield above 10 per cent. Investors looking for safety will support Telstra in a stretched market.
SELL RECOMMENDATIONS
Brambles (BXB)
Chart: Share price over the year
We believe the Brambles business model is under threat from global online models with their own delivery mechanisms. The declining retail market is beginning to weigh on the US business and we see this as a structural risk to the model. Shares in this supply chain logistics company closed at $9.45 on March 30.
Perpetual (PPT)
Chart: Share price over the year
The wealth manager is trading at a premium to the market despite being a proxy to the market. Recent outperformance to the sector and the market increases the risk of profit taking in a market downturn. The shares closed at $52.34 on March 30.
Matthew Felsman, APP Securities
BUY RECOMMENDATIONS
Fairfax Media (FXJ)
Chart: Share price over the year
Takeovers are likely to be the flavour of first half 2017 as corporates rush to merge or acquire before interest rates move higher. FXJ delivered a good first half profit report. Speculation private equity is shopping for its Domain business or even the entire group has driven up the share price. Technically, the share price looks good with new highs likely amid limited downside.
Primary Health Care (PRY)
Chart: Share price over the year
Operates medical centres, pathology laboratories and diagnostic imaging centres. The company has done it tough in the past few years, but we believe the worst is behind it and a turnaround is underway. We believe PRY offers takeover appeal. From a charting perspective, a move towards $5 can’t be ruled out. The shares were trading at $3.57 on March 31.
HOLD RECOMMENDATIONS
ANZ Bank (ANZ)
Chart: Share price over the year
Historically, April is one of the strongest months for Australian banks before announcing half year results and dividends in May. Another attractive factor is US banks report in early April and we’re now targeting fresh highs for the US Banks in 2017. The S&P/ASX 200 Financial Index remains one of the strongest technical set ups we can identify.
The Star Entertainment Group (SGR)
Chart: Share price over the year
Breaking through resistance at $5.40 shows good price strength. Star is one to hold, even after recent strong gains. We believe the casino operator offers good value as it provides exposure to the growing Australian tourism industry. Full year results should be positive. The stock was trading at $5.485 on March 31.
SELL RECOMMENDATIONS
Bellamy’s Australia (BAL)
Chart: Share price over the year
Investor confidence has been savaged in the Chinese speculative sector. Once insanely high valuations in this infant formula company have returned back to earth, melting wealth and confirming these stocks are too hard to value, in our view.
Woolworths (WOW)
Chart: Share price over the year
A sector to avoid for now. Capital can be deployed elsewhere with substantially better risk versus reward. With Aldi and Coles seemingly gaining traction amid Amazon expecting to launch in Australia, there’s too many issues to consider. Charts look opaque around the $26 region. The shares were trading at $26.59 on March 31.
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.
