Simon Herrmann, wise-owl.com
BUY RECOMMENDATIONS
Fleetwood Corporation (FWD)
Chart: Share price over the year
Offers affordable accommodation solutions and makes caravans. We’re attracted to recent management changes and Fleetwood’s improving operational performance. A return to positive EBITDA may result in a dividend, which ceased in 2014. There’s potential for a turnaround.
Crowd Mobile (CM8)
Chart: Share price over the year
The acquisition of mobile payments provider Track Holdings has been disappointing. However, after plugging new assumptions into our valuation model, we arrive at an average price target of 29 cents a share. A capital raising at a premium to the market and the company’s improving balance sheet are positive signs. We upgrade our view from a hold to a speculative buy. The shares were trading at 15 cents on June 22.
HOLD RECOMMENDATIONS
Dicker Data (DDR)
Chart: Share price over the year
The company has recently increased its focus on software and cloud computing. It’s well positioned to take advantage of market trends in this space through its IT capabilities and partner ecosystem. Offers capital growth and income potential.
MSL Solutions (MPW)
Chart: Share price over the year
MSL’s primary asset is its MPower platform, a cloud based software application designed to improve business workflows, governance and guest experiences for membership clubs. We’re attracted to the company’s growth trajectory and share of recurring revenue, which provides a sound base to grow organically and via acquisitions. The price holding up post its IPO in May is also behind our recommendation.
SELL RECOMMENDATIONS
Monash IVF Group (MVF)
Chart: Share price over the year
The share price of this fertility care provider has fallen by almost 40 per cent since peaking in October 2016. During the 2017 first half, patient treatments fell and revenue marginally declined, although net profit after tax was up. The resignation of managing director James Thiedeman is unsettling and, for us, creates too much uncertainty.
LogiCamms (LCM)
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Chart: Share price over the year
This engineering and consulting services provider operates in the hydrocarbon, minerals and metal and infrastructure industries. LCM issued a trading update on June 13, downgrading its revenue guidance for the second half of the year, as revenue from new contract wins has either been deferred into fiscal year 2018, or built up slower than forecast. The company also expects a significant impairment of intangibles based on lower than expected trading results for fiscal year 2017.
Jeremy Hook, TMS Capital
BUY RECOMMENDATIONS
Event Hospitality & Entertainment (EVT)
Chart: Share price over the year
Owns hotels, cinemas and leisure assets and has a long track record of solid performance. Focused management, sizeable property assets and a healthy 4.1 per cent fully franked dividend yield underline the opportunity in EVT.
Brickworks (BKW)
Chart: Share price over the year
A play on building activity, but also a solid investment company via its cross shareholding in Washington H. Soul Pattinson. It trades at a discount to the sum of its parts and is a long term wealth creator.
HOLD RECOMMENDATIONS
Wesfarmers (WES)
Chart: Share price over the year
Updates from the latest Wesfarmers investor day were mostly positive, despite slowing margins in the Coles business. WES remains a core portfolio holding. We’re keen to find more companies like WES that invest for the long term and put shareholders first.
Boral (BLD)
Chart: Share price over the year
The market has been sceptical about this building products maker in the past year, particularly over its Headwater fly ash acquisition in the US. The price has rallied and the stock is now trading at fair value. Recently trading on about 19 times fiscal year 2018 earnings correctly values the company’s growth prospects against execution risk.
SELL RECOMMENDATIONS
Cimic Group (CIM)
Chart: Share price over the year
It’s been a good year for the construction giant. But we believe the stock is expensive given it was recently trading on more than 19 times fiscal year 2018 earnings. In our view, the stock has always been cyclical and now is the time to cycle out.
DuluxGroup (DLX)
Chart: Share price over the year
The paint company has continued to rally in recent months, so we re-instate our sell recommendation. We can see a slowing growth outlook and believe the stock is expensive. We prefer Brickworks.
Darren Jackson, Sanlam Private Wealth
BUY RECOMMENDATIONS
Pacific Current Group (PAC)
Chart: Share price over the year
Pacific Current Group is a multi boutique asset management firm. Previously underperforming, the company now looks to be turning around. Its been significantly increasing its overall funds under management.
Nearmap (NEA)
Chart: Share price over the year
Provides highly detailed mapping content to corporate and government agencies. It’s gained good traction in the Australian market and has recently launched in the US. Should it execute on its US growth strategy, significant upside potentially exists.
HOLD RECOMMENDATIONS
Sky and Space Global (SAS)
Chart: Share price over the year
We recommended buying this technology firm in January 2017 on its plans to launch three commercial nano- satellites into space. Since then, the stock has tripled in price. Consider holding until we can assess outcomes from its launch that will provide global communication infrastructure and services to the telecommunications industry.
Catapult Group International (CAT)
Chart: Share price over the year
A global sports analytics company, its operating performance has been exceptional, with the company consistently delivering strong growth and expanding products and services. Given the large share price retreat following a lofty valuation, good upside should emerge with time.
SELL RECOMMENDATIONS
Retail Food Group (RFG)
Chart: Share price over the year
Manages and operates a group of food outlets domestically and internationally. The share price fell by 10 per cent on June 21 after the company trimmed profit growth forecasts. We remain cautious about RFG’s business model, as, in our view, it relies too much on acquisition led growth, which has contributed to operational complexity. The share price closed at $4.56 on June 21.
Afterpay Holdings (AFY)
Chart: Share price over the year
Provides consumer finance through a buy now, pay later model. The stock recently traded at a year high, hitting $3.15 on June 6, 2017. On June 20, the diluted market capitalisation was about $512 million. In the short term, we think the stock needs to take a breather after its significant run and achievements before continuing its ascent over the longer term.
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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.
