Michael Gable, Fairmont Equities

BUY RECOMMENDATIONS

Oil Search (OSH)

Chart: Share price over the year

OSH broke below trendline support in early June, but recently looked bullish on the chart. It had retested the June low, but bounced strongly. We also saw a buy signal on the MACD (moving average convergence divergence). OSH is likely to retest resistance near $7. If it can get above that, then it could rally up towards $7.50. OSH was trading at $6.62 on July 6.

BlueScope Steel (BSL)

Chart: Share price over the year

At the end of May, BSL broke out of a flag formation, implying upside towards $13. The stock has since made higher highs and higher lows since the low point in May. This further confirms a move and we’re confident of more upside. The stock remains a buy on dips and it should trade up towards $15. The shares were trading at $13.91 on July 6.

HOLD RECOMMENDATIONS

Bank of Queensland (BOQ)

Chart: Share price over the year

We bought BOQ in June. From an Elliott Wave perspective, it now seems to be in its third of five waves. This means we’re in the strongest part of the move. Consider staying long in BOQ as it strives to move above $12 before encountering some resistance. The shares were trading at $11.76 on July 6.

South32 (S32)

Chart: Share price over the year

Since peaking in December, the S32 chart resembles a symmetrical triangle. It briefly dipped below support near $2.60, but has managed to quickly recover. This miner should move higher towards resistance near $2.85 and ultimately to high $2.90 levels. The stock looks well supported and one to watch as it continues to gather momentum. The shares were trading at $2.785 on July 6.

SELL RECOMMENDATIONS

Suncorp (SUN)

Chart: Share price over the year

From a technical perspective, the next few weeks will be crucial for this financial services stock. It rose above its 2014 peak, but failed at that point. This means the stock can dip below the previous low. I’m making a big call, but after examining the charts of Suncorp and other companies, I believe Suncorp may fall towards $10. The stock finished at $14.85 on July 6.

QBE Insurance Group (QBE)

Chart: Share price over the year

Recently, QBE issued a profit warning and was sold off. QBE has disappointed the market on several occasions in the past few years, and that normally results in it falling towards $10. We can see some support closer to $10.50. The shares finished at $12.07 on July 6.


Michael Wayne, KOSEC

BUY RECOMMENDATIONS

Janus Henderson Group PLC (JHG)

Chart: Share price over the year

Formerly Henderson Group, JHG is one of Europe’s largest investment managers, servicing institutional, retail and high net worth investors across a variety of asset classes. The new combined group will have US$300 billion in assets under management, giving the company significant size and scale. The merger should also offer the new entity an opportunity to cut costs by reducing the size of middle and back office functions.

Trade Me Group (TME)

Chart: Share price over the year

 

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We like this New Zealand company for its leading online auction and sales platform. TME has developed a highly engaged audience and strong brand equity, courtesy of its intuitive interface, security features and ease of payments. In past years, management invested in head count and website development, which drove up costs. Management has since shifted from an investment focus towards an earnings focus. Signs of solid earnings growth are starting to emerge in company reports.

HOLD RECOMMENDATIONS

Orora (ORA)

Chart: Share price over the year

This packaging giant has 39 plants in seven countries. Average packaging sector EBIT margins have increased from 6 per cent to 7 per cent a decade ago to about 10 per cent today. ORA recently reaffirmed guidance and, unlike some competitors, has less exposure to cyclical products, such as vitamins and infant formula. ORA also has superior geographical diversification, generating 35 per cent of earnings in the US.

Seek (SEK)

Chart: Share price over the year

Acquired minority shareholdings in top online job sites in Brazil, Mexico, Indonesia, Thailand, Malaysia, the Philippines and China. Internet penetration is at relatively low levels in these countries, but growing rapidly. These huge populations provide Seek with solid growth potential. Consequently, I feel Seek justifies its growth premium.

SELL RECOMMENDATIONS

Coca-Cola Amatil (CCL)

Chart: Share price over the year

Its valuable distribution network and majority share of the Australian carbonated soft drink market provide it with a strong competitive advantage. Nevertheless, volume growth rates continue to slow, with increases across water, dairy and energy drinks only partially offsetting declines in carbonated and sparkling drinks. Competitor pricing pressure and intense competition across the grocery industry have the potential to further compress margins.

Myer Holdings (MYR)

Chart: Share price over the year

The department store giant was priced at $1.355 on January 6, 2017. It was trading at 86.2 cents on July 5. Total third quarter sales were down 3.3 per cent to $653 million. Total year to date sales were down 1.3 per cent to $2.438 billion. MYR operates in a fiercely competitive sector. An impending Amazon operation in Australia could make it even tougher. Better opportunities exist elsewhere.


Jonathon Howe, Red Leaf Securities

BUY RECOMMENDATIONS

The Hydroponics Company (THC)

Chart: Share price over the year

With a significantly lower market cap than its peers, this hydroponics equipment stock is generating revenue, with significantly more growth expected. We expect the company to benefit if it’s granted a medicinal cannabis licence in Australia. Red Leaf was joint lead manager to the IPO at 20 cents a share. The stock closed at 31.5 cents on July 6.

Telstra (TLS)

Chart: Share price over the year

As long as the company maintains its yield, Telstra is a solid portfolio stock and we’ve been recently accumulating it at these levels. We believe Telstra could be re-rated once the domestic roaming issue between the ACCC and Vodafone is resolved in the Federal Court.

HOLD RECOMMENDATIONS

Eve Investments (EVE)

Chart: Share price over the year

A listed investment company that’s agreed to acquire a 40 per cent stake in Omni Innovation, a company that focuses on food for special medicinal purposes. It’s also entered into a binding term sheet to acquire a 50 per cent interest in Jenbrook, a producer of organic essential oils. Jenbrook is exploring the opportunity to develop medicinal cannabis honey. Consider holding for further developments. I own shares in EVE.

OneVue Holdings (OVH)

Chart: Share price over the year

The Federal Budget unveiled measures to address the housing affordability problem. We believe this superannuation services provider should benefit from budget plans that essentially enable additional contributions to super funds from July 1.

SELL RECOMMENDATIONS

The A2 Milk Company (A2M)

Chart: Share price over the year

We’ve previously called this a sell at $3.50 on our belief that Chinese growth will eventually slow. We’re concerned about potentially tighter Chinese restrictions on imports of dairy and infant formula products.

It may be prudent to reduce holdings. The shares closed at $3.74 on July 6.

Adairs (ADH)

Chart: Share price over the year

This retail stock was priced at $1.55 on January 6, 2017. On June 15, it was priced at 57 cents. It has lifted to close at 88.5 cents on July 6. For the 26 weeks ending January 1, 2017, net profit after tax fell 35.3 per cent on the prior corresponding period to $8.6 million. This homewares company operates in a fiercely competitive environment. We believe the company is too expensive. Prefer others.

 

 

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