Ryan Gale, PAC Partners
BUY RECOMMENDATIONS
Select Harvests (SHV)
Chart: Share price over the year
Almond crop guidance is forecast at 16,000 tonnes for fiscal year 2017, a 13 per cent increase on the previous year. Production in 2025 is forecast at 24,000 tonnes. Supplying into high global demand from a low cost base paints a bright long term outlook. Our 12 month price target is $8.65. The shares were trading at $5.69 on April 6.
Azure Minerals (AZS)
Chart: Share price over the year
Azure Minerals has been successful in defining silver and gold resources in Mexico, with four significant discoveries in six years. This success has attracted the attention of major miners to joint venture into their projects. Also, AZS has a pipeline of early stage projects continuing to progress in Mexico. It’s also conducting due diligence on several others. The company had almost $12 million in cash and cash equivalents at December 31, 2016. A speculative buy. The shares were trading at 1.5 cents on April 6.
HOLD RECOMMENDATIONS
Medical Developments International (MVP)
Chart: Share price over the year
A healthcare company with products for pain management, asthma and resuscitation. Revenue grew 34 per cent on the prior corresponding period to $8.05 million for the six months to December 31, 2016. Net profit after tax was up 74 per cent to $410,000. MVP has good distribution partners. We await more clarity on short term earnings upgrades.
Investigator Resources (IVR)
Chart: Share price over the year
IVR remains focused on feasibility work and the resource upgrade at its Paris silver deposit in South Australia. Drilling at the Nankivel copper-gold porphyry target has started. A speculative stock trading at 3.6 cents on April 6. Investors should consider holding the stock until drilling results are announced.
SELL RECOMMENDATIONS
BHP Billiton (BHP)
Chart: Share price over the year
Chinese demand led a recovery in the iron ore price to above $US80 a tonne. A steady ramping up of global production is exacerbating claims ore prices are currently over cooked. The scale of Chinese port held inventories indicates demand may not be as strong as headline figures suggest. I’m expecting a correction in iron ore prices going forward to be reflected in a weaker BHP share price.
Virgin Australia Holdings (VAH)
Chart: Share price over the year
The airline has struggled to remain profitable for most of its listed life. I believed tailwinds, such as low fuel prices would benefit the company, but it still struggles to generate handsome returns for shareholders. Virgin needs to show more to be able to prove worth of ownership.
Warwick Grigor, Far East Capital
BUY RECOMMENDATIONS
Cobalt Blue (COB)
Chart: Share price over the year
Listed on February 2, 2017 after raising $10 million in an IPO. It’s a cobalt specialist without relying on the economics of a copper or nickel project to warrant development. Its co-product will be sulphur, either elemental or as sulphuric acid. The 35 million tonnes of ore body could be as large as 100 million tonnes by the time drilling is completed, and the proximity to Broken Hill ensures good infrastructure. In my view, COB is more focused and offers greater credibility than many other companies that have added cobalt to their profiles.
MacPhersons Resources (MRP)
Chart: Share price over the year
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MRP has reported good drilling results at the Boorara gold project, 10 km east of Kalgoorlie’s golden mile. It appears three gold ore bodies identified along a 1.5 km strike length will host 1 million to 2 million ounces of gold. We expect the share price to benefit if more drill holes confirm the potential and the dimensions. The proximity to Kalgoorlie will be a fillip for any development proposals.
HOLD RECOMMENDATIONS
Anova Metals (AWV)
Chart: Share price over the year
After many years of frustrating delays in permitting for its Big Springs gold project in Nevada, AWV finally has a green light. Its ore will soon be mined and treated at the nearby Jerritt Canyon treatment plant, which is desperately short of suitable ore for its roaster. AWV may become a takeover target.
West Wits Mining (WWI)
Chart: Share price over the year
WWI is now producing gold from its licences at the Witwatersrand Basin in South Africa. The big payday will come when it converts more title to mining rights and sells out to local companies desperately looking for mill feed. It may achieve clear title for the Derewo licence in Indonesia’s Papua province, which could be very exciting on the exploration front.
SELL RECOMMENDATIONS
Berkeley Energia (BKY)
Chart: Share price over the year
This uranium company has enjoyed a good run in the past year, but recently broke that uptrend and looks set for further falls. Construction of its uranium plant in Spain will continue throughout 2017. In my view, the shares are likely to stay under pressure until operational success is confirmed.
Toro Energy (TOE)
Chart: Share price over the year
In keeping with my negative outlook for uranium, I believe Toro will continue to be under pressure for some time. It has a uranium project with merit in Western Australia, but obtaining approvals and finance will be challenging. Even if they are achieved, I doubt the economics will enable a sufficient return for shareholders.
Michael Wayne, KOSEC
BUY RECOMMENDATIONS
Fisher & Paykel Healthcare Corporation (FPH)
Chart: Share price over the year
Reporting in May, Fisher & Paykel’s competitive advantage lies in the respiratory and acute care market where it enjoys a dominant market share. Its obstructive sleep apnoea device business has strong growth prospects, but FPH is a smaller player in this highly competitive market dominated by the likes of ResMed. Recurring revenue from high margin consumables accounts for 84 per cent of group revenue, which is a highly attractive aspect of this business.
Vita Group (VTG)
Chart: Share price over the year
Group revenue increased 8 per cent on last year’s corresponding period to $344.1 million for the 2017 first half. Net profit after tax increased 10 per cent to $21.4 million, while margins also improved. In the second half, management is targeting improving productivity from its retail network and a continuing strong performance of its business channels. Further, VTG will increase its retail presence with five more Telstra stores, taking its licensed store portfolio to 107.
HOLD RECOMMENDATIONS
Bapcor (BAP)
Chart: Share price over the year
A leader in the automotive aftermarket, providing repairs, spare parts and vehicle servicing. A good 2017 first half result showed growing revenues, earnings, margins and same store sales. The company’s growth target for Burson’s is at least 200 stores across Australia by 2021. The Autobarn brand operates a premium full service retail accessories line with 113 stores. The target is 200 stores in due course.
Macquarie Group (MQG)
Chart: Share price over the year
Macquarie is a high yielding business reporting in May. The share price closed at $88 on April 6. The stock isn’t cheap, but today’s environment of rising global markets and elevated merger and acquisition activity ensures the immediate outlook supports current prices.
SELL RECOMMENDATIONS
AMP (AMP)
Chart: Share price over the year
AMP earnings and dividends per share have fallen significantly in the past 10 years. Granted, there’s been a series of mergers and divestments over that period convoluting the numbers, but, nevertheless, I believe there’s better opportunities elsewhere in the diversified financials. Diversified financials with overseas exposure, such as Macquarie Group, Magellan Financial Group, Henderson Group and Challenger offer that opportunity rather than a domestic focused AMP diversified financial.
Whitehaven Coal (WHC)
Chart: Share price over the year
Buoyant coal prices has contributed to an eye catching transition, enabling WHC to significantly reduce debt. However, the question is whether that momentum can continue? After the incredible rally in coal prices in 2016, I feel there is limited upside compared with the potential downside should the coal price moderate.
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.
