18 Share Tips – 8th July 2024

Tom Bleakley, BW Equities

BUY RECOMMENDATIONS

BUY – Woodside Energy Group (WDS)

This energy giant has been benefiting from increasing crude oil prices. The company was recently trading on an appealing dividend yield above 7 per cent. Also, WDS recently announced it had achieved first oil from the Sangomar field in Senegal. Electric vehicle sales growth has been slower than expected in the US. WDS shares have risen from $26.97 on June 24 to trade at $29.22 on July 4. The shares are still trading well below $39 achieved in August 2023.

BUY – IperionX (IPX) 

IPX is building its first titanium manufacturing facility in the US state of Virginia. Titanium is used in military and aviation parts. About 70 per cent of the global titanium supply chain is controlled by China and Russia. The company recently raised $A50 million, with the executive chairman subscribing for $A6.1 million of stock at $A1.91, which shows confidence in the company. The company is well managed. I own shares in IPX. The shares were trading at $2.39 on July 4.

HOLD RECOMMENDATIONS

HOLD – Lendlease Group (LLC)

This property developer and investment manager recently entered into an agreement to sell its US military housing business for $A480 million, a premium to book value. The company is re-focusing on its Australian operations and international investment management capabilities. The company’s strategy includes recycling more than $4.5 billion in capital. We suggest holding for now, but investors should monitor the news flow.

HOLD – Zip Co (ZIP) 

Shares in this buy now, pay later company have risen from 41 cents on July 7, 2023, to trade at $1.66 on July 4, 2024. The company generated revenue of $219.2 million in the third quarter of fiscal year 2024, up 26.6 per cent on the prior corresponding period. The revenue margin improved to 9.1 per cent. Possible rising interest rates in Australia is a risk. Keep an eye on company performance.

SELL RECOMMENDATIONS

SELL – Goodman Group (GMG) 

The share price of this integrated industrial property group has risen from $19.62 on July 7, 2023, to trade at $35.565 on July 4, 2024. In our view, the price has risen too rapidly and is exposed to a correction if global economies falter. Investors may want to consider trimming holdings into this run.

SELL – JB Hi-Fi (JBH)

Australian shoppers have been resilient despite stubborn inflation and cost of living increases. JBH shares have risen strongly in the past 12 months. However, possible interest rate rises will target discretionary spending. Investors may want to consider selling some of their holdings at what we consider a good price.

Tony Paterno, Ord Minnett

BUY RECOMMENDATIONS

BUY – Regal Partners (RPL)

RPL is a specialist alternatives investment manager. RPL recently announced it was acquiring 100 per cent of Merricks Capital, a private credit fund manager specialising in hard asset lending across the agriculture, commercial real estate and industrial sectors. We upgrade our earnings between 11 per cent and 23 per cent in response to the acquisition and increasing performance fee expectations. The Merricks acquisition gives RPL further scale and diversification. RPL has delivered a strong investment performance across several core funds.

BUY – Worley (WOR)

Worley is a global engineering and professional services company. At its investor day in May, the company reported that its factored sales pipeline was up 14 per cent in the 2024 financial year to March 31. It’s backlog, revenues expected to be recorded, was up 5 per cent in the 2024 financial year to February 29. Management remained upbeat about the longer-term outlook. The stock offers value as it’s fallen from $17.43 on January 2 to trade at $14.71 on July 4.

HOLD RECOMMENDATIONS

HOLD – Coles Group (COL)

Total group sales revenue of $10.033 billion in the third quarter of fiscal year 2024 was up 3.4 per cent on the prior corresponding period. The third quarter builds on an improving performance posted at its first half results. In our view, the return of fresh food inflation should give the market confidence that industry revenue growth will be high enough to support margin expansion.

HOLD – APA Group (APA)

APA is an energy infrastructure business. It’s poised to benefit from significant government and industry investment in the transition to cleaner energy. But the pace of transition remains uncertain. APA is focusing on re-investing in growth, which is needed to generate higher returns for investors. The company recently announced it expects to recognise a pre-tax, non-cash impairment of about $145 million in relation to the Moomba Sydney Ethane Pipeline. However, there was no change to fiscal year 2024 distribution guidance or underlying EBITDA guidance.

SELL RECOMMENDATIONS

SELL – Wesfarmers (WES)

The company’s Bunnings hardware chain is a top retailer. Bunnings group revenue of $9.963 billion for the half year ending December 31, 2023, was up 1.7 per cent on the prior corresponding period. However, housing starts and approvals were recently at 10-year lows, which impacts construction. Fiscal year 2025 consensus expectations of 4 per cent like-for-like sales growth is unrealistic, in our view. WES investors may want to consider taking a profit.

SELL – JB Hi-Fi (JBH)

The consumer electronics giant posted a better than expected first half result in fiscal year 2024, in our opinion. Again, JBH proved its retailing credentials. The shares have risen from $43.31 on July 7, 2023, to trade at $61.96 on July 4, 2024. In our view, the valuation is stretched at these levels. Investors may want to consider cashing in some gains.

Michael Gable, Fairmont Equities

BUY RECOMMENDATIONS

BUY – Fortescue (FMG)

Shares in this iron ore producer have fallen from $27.30 on May 22 to trade at $22.63 on July 4. We believe this is an attractive entry level. Weaker iron ore prices in 2024 have contributed to the share price fall. In past years, FMG has often been oversold on weaker iron ore prices only to bounce back. The share price charts are displaying signs that FMG shares should move higher from these oversold levels.

BUY – Capricorn Metals (CMM)

CMM is a mid-tier gold producer with operations in Australia. We remain positive on the outlook for gold in the next 12 months. CMM is a low-cost producer with plenty of cash in the bank. Capricorn’s long-term chart suggests further upside from here. In our view, the shares are trading at an attractive entry level.

HOLD RECOMMENDATIONS

HOLD – Santos (STO)

We expect demand for oil and gas to increase during the next 12 months. Santos is well placed to capture its fair share of demand. It recently signed an LNG supply contract with Hokkaido Gas for 10 years, which starts in 2027. The share price chart was recently showing signs that buyer demand is increasing. The shares have risen from $7.35 on June 18 to trade at $8 on July 4.

HOLD – WiseTech Global (WTC)

WiseTech develops software for the global logistics industry. The business continues to grow, and recent acquisitions are also progressing well. The addressable market for WTC remains an appealing opportunity and we expect current rates of earnings growth to continue.

SELL RECOMMENDATIONS

SELL – Platinum Asset Management (PTM)

This fund manager experienced net outflows of about $295 million in May 2024. The figure includes net outflows from the Platinum Trust Funds of about $246 million. The shares have fallen from $1.63 on July 7, 2023, to trade at $1.057 on July 4, 2024. The shares were priced at $4.55 on July 5, 2021.

SELL – Collins Foods (CKF)

This fast food operator generated revenue from continuing operations of $1.488 billion in fiscal year 2024, an increase of 10.4 per cent on the prior corresponding period. Same store sales grew by 3.8 per cent at KFC Australia and by 4.9 per cent in KFC Europe. The shares have fallen from $11.99 on January 2 to trade at $9.03 on July 4. Soaring cost of living increases may pressure the company’s performance if customers cut back on fast food.

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The above recommendations are general advice and don’t take into account any individual’s objectives, financial situation or needs. Investors are advised to seek their own professional advice before investing. 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.