Matthew Felsman, APP Securities
BUY RECOMMENDATIONS
Henderson Group PLC (HGG)
Chart: Share price over the year
If you’re looking to put some funds to work, I’m keen on exposure to the UK and British pound. HGG recently merged with Janus Capital, and HGG looks cheap on a recent 2017 price/earnings multiple of around 14 times. Value is added from a recent yield above 6 per cent. Charts for this global asset manager are also looking good. Technically, $4.50 looks achievable. The stock was trading at $3.865 on May 4.
CYBG PLC (CYB)
Chart: Share price over the year
Another financial stock with leverage to an improving UK economy. CYB trades cheaply relative to global banks and also looks technically strong. Short term lows in US bond yields are positive for banks and CYB is a stock that will benefit from rising interest rates. CYB is also undergoing an operational turnaround with a big cost reduction strategy being rolled out.
HOLD RECOMMENDATIONS
Newcrest Mining (NCM)
Chart: Share price over the year
Gold stocks are struggling at present as investors focus on higher interest rate sensitive areas of the market. As volatility hits a 10 year low, now is the time to be long on gold stocks. The market is complacent. Further developments in North Korea may lead to a rally in gold stocks.
Oz Minerals (OZL)
Chart: Share price over the year
A recent update was met with selling. But I believe the stock will do well in the short term from a positive technical set up in the copper price. Recently, investors put almost $1 billion to work in emerging market ETFs (exchange traded funds), making it eight straight weeks of gains. Yet over the same period, local resource stocks have tumbled. We believe this divergence will correct shortly.
SELL RECOMMENDATIONS
Platinum Asset Management (PTM)
Chart: Share price over the year
The recent change in fee structure and lack of any buy back almost eight months after it was announced creates too much uncertainty. The share price will react in either direction when the latest funds under management figures are released. Shorter term performance lags typically means outflows. Technically, $4 is the next obvious target. On April 27, the shares were priced at $4.99. On May 4, the shares were trading at $4.32.
Wesfarmers (WES)
Chart: Share price over the year
For me, there’s too much uncertainty here. I question how profitable a leading supermarket should be? And that’s not clear cut. But when it comes to Coles, I believe it should be more profitable than it is now.
Michael Gable, Fairmont Equities
BUY RECOMMENDATIONS
Webjet (WEB)
Chart: Share price over the year
The online travel agency has been trending strongly for two years, except for a big sell off in November last year. After that price drop, the share price rallied, but has been drifting a little lower since February. Positive signs suggest new highs. A solid move through $11.60 could see WEB push through the prior high. Otherwise a clear move below $11 would be a negative. The shares closed at $11.33 on May 3.
BT Investment Management (BTT)
Chart: Share price over the year
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BTT has convincingly broken out of a triangular continuation pattern. Momentum is strong and it should continue to push through to new highs over the next few months. The shares closed at $12.20 on May 3.
HOLD RECOMMENDATIONS
Credit Corp Group (CCP)
Chart: Share price over the year
Price action during February and March saw it retest support and it now seems to have broken the mild downtrend that started last year. It’s up against strong resistance in the mid $18 region. If it breaks higher, then it should be followed. Otherwise, weakness at mid $17 levels can be bought with more confidence in light of its recent strong move off support near $16. The shares closed at $18.42 on May 3.
Speedcast International (SDA)
Chart: Share price over the year
Since the peak in October 2015, this satellite communications provider started to trend lower, but this merely looks like a large flag formation. Earlier this year, SDA broke above the flag, retested it, and is now heading higher again on good volume. The charts suggest SDA can continue trending higher to at least retest the 2015 high. The shares closed at $3.94 on May 3.
SELL RECOMMENDATIONS
Qantas (QAN)
Chart: Share price over the year
In my view, the shares are close to full value again. The stock is enjoying a solid climb driven by investors who fear missing out. We expect a retreat to below $4. The shares closed at $4.36 on May 3.
Resolute Mining (RSG)
Chart: Share price over the year
Since taking a tumble in February, the shares have continued to show signs of weakness on the chart. Any rallies are short lived and the sell offs are still impulsive on high volume. We are targeting a move back below $1 at which point we will reassess. Shares in this gold producer closed at $1.165 on May 3.
Matthew Litchfield, PhillipCapital
BUY RECOMMENDATIONS
Telstra (TLS)
Chart: Share price over the year
Telstra has been sold off on news a fourth player plans to enter Australia’s mobile arena. We believe the sell-off was overdone. We expect Telstra to remain the dominant player in its space going forward. Telstra is trading at a discount to our fair value and the recent fully franked dividend yield above 7 per cent is attractive.
Tianmei Beverage Group Corporation (TB8)
Chart: Share price over the year
The recently listed Tianmei provides promotional services to producers of fast moving consumer goods as well as its own water products in the Guangdong province in China. It also acquired a water plant to help consolidate margins. Tianmei shares are trading below cash level. The shares closed at 12 cents on May 3.
HOLD RECOMMENDATIONS
Challenger (CGF)
Chart: Share price over the year
Challenger is well placed to benefit from expected growth in annuities in Australia, which, according to CGF’s March quarter report, increased 53 per cent on the previous corresponding period. This stock remains an attractive long term investment and was recently trading on a decent 2.5 per cent dividend yield.
Carsales.com (CAR)
Chart: Share price over the year
The positive half year results announced in February shows the business continues to perform well and also expand. The agreement to acquire DeMotores makes CAR the number one automotive classified network operating across the Latin American region. The region is growing and an attractive market to enter.
SELL RECOMMENDATIONS
Coca-Cola Amatil (CCL)
Chart: Share price over the year
A company update on April 21, 2017 revealed year to date trading in Australian beverages had been weaker than last year with all channels experiencing volume and price pressure due to competition and category trends. I see this trend continuing while consumers shun sugary carbonated beverages in favour of healthier alternatives.
The Reject Shop (TRS)
Chart: Share price over the year
The current environment remains tough for this discount variety retailer. The company announced challenging trading conditions, negative comparable store growth in the third quarter and a decrease in underlying customer numbers on the prior corresponding period. TRS is simply underperforming and I prefer companies that are in favorable sectors.
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.
