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James Samson, Lincoln Indicators

BUY RECOMMENDATIONS

Wesfarmers (WES)

Chart: Share price over the year to versus ASX200 (XJO)

The Coles business remains the growth driver and is expected to perform well into the future. A pleasing quarterly production report from the coal business indicates it’s on track to achieve guidance. We believe WES offers investors a solid income stream with capital upside. The company is in strong financial health.

Titan Energy Services (TTN)

Chart: Share price over the year to versus ASX200 (XJO)

TTN is a small, niche mining services business focusing on the coal seam gas sector in Queensland. The business has experienced significant growth in the past 12 months and we expect this to continue organically and via acquisition into full year 2014. The company’s growth can be attributed to its accommodation business as the average number of rooms contracted has increased significantly.

HOLD RECOMMENDATIONS

Insurance Australia Group (IAG)

Chart: Share price over the year to versus ASX200 (XJO)

Following a pleasing earnings guidance upgrade, IAG has achieved strong insurance margins during full year 2013 after low claims drove higher than anticipated returns. While IAG is performing well, most of the upside has been factored into its current share price.

G8 Education (GEM)

Chart: Share price over the year to versus ASX200 (XJO)

GEM remains in strong financial health. Expect increasing earnings from acquisitions in coming years. However, on a forward price/earnings ratio of about 18 times full year 2014 earnings, much of the expected growth is already factored into the current share price. Providing a strong income stream builds the case to hold the stock.

SELL RECOMMENDATIONS

GUD Holdings (GUD)

Chart: Share price over the year to versus ASX200 (XJO)

Operates branded businesses, such as Sunbeam, Oates cleaning and Ryco automotive. We believe the lower Australian dollar will adversely impact GUD, and benign retail conditions may add to the challenging outlook.

ALS Limited (ALQ)

Chart: Share price over the year to versus ASX200 (XJO)

With global minerals exploration expenditure in free-fall, ALQ has raised capital through a rights issue to fund an acquisition in the oil and gas testing industry. We continue to believe ALQ is a good business, but the company may experience significant industry specific challenges, suggesting there may be further downside.

 

Michael Heffernan, Lonsec

BUY RECOMMENDATIONS

Telstra (TLS)

Chart: Share price over the year to versus ASX200 (XJO)

Telstra has been a stunning sharemarket performer in the past 12 months. The prospect of a 14 cent dividend in its upcoming report, and the likelihood of a cut in official interest rates adds to its appeal. The recent share price retreat presents an opportunity to buy a strongly performing stock in the run-up to its report.

Computershare (CPU)

Chart: Share price over the year to versus ASX200 (XJO)

A major share registry business that consistently delivers sound results in challenging circumstances. It benefits from improving sharemarkets across the globe and a stronger US dollar. International diversification makes it attractive.

HOLD RECOMMENDATIONS

Credit Corp Group  (CCP)

Chart: Share price over the year to versus ASX200 (XJO)

The debt collector has proved itself a sound sharemarket performer with attractive fundamentals. It delivers a reasonable fully franked dividend and has a competitive profit growth profile.

Thorn Group (TGA)

Chart: Share price over the year to versus ASX200 (XJO)

Formerly Radio Rentals of Australia, Thorn Group operates in a largely recession proof area of the economy, concentrating on the rental and buy market for those unable to afford the purchase price outright. It has a low debt level and pays an attractive fully franked dividend.

SELL RECOMMENDATIONS

JB Hi-Fi (JBH)

Chart: Share price over the year to versus ASX200 (XJO)

The recent strong sharemarket performance may encourage investors who bought in at a lower price to take some profits, given continuing fragile retail conditions.

Decmil (DCG)

Chart: Share price over the year to versus ASX200 (XJO)

Builds accommodation villages for miners and now asylum seekers, and performed well in the resources boom. It recently won an accommodation building contract on Manus Island in Papua New Guinea. But in the medium term, we expect it to be affected by reducing capital investment by major mining companies. Other sectors preferred.

 

Peter Russell, Russell Research

BUY RECOMMENDATIONS

McMillan Shakespeare (MMS)       

Chart: Share price over the year to versus ASX200 (XJO)

I believe the company will work extremely hard and will successfully minimise any further adverse impact. In my view, it’s more likely the FBT proposal will be ditched by a change of government, or likely defeated or modified if Labor wins. I believe a good opportunity exists, irrespective of which party wins the next election.

TFS Corporation (TFC)

Chart: Share price over the year to versus ASX200 (XJO)

From its Ord River base in WA, TFS has created, manages and partly owns the largest area of Indian sandalwood plantations in the world. It produces sandalwood oil valued for its fragrance and medicinal use. As Indian sources diminish rapidly, timber and oil prices continue to rise, giving TFS major growth prospects. Consider investing now, as results and an initial harvest reduce risk margin and build profits.

HOLD RECOMMENDATIONS

Corporate Travel Management (CTD)

Chart: Share price over the year to versus ASX200 (XJO)

With no net debt and a 30 per cent return on equity, we expect earnings per share growth above 20 per cent in financial year 2014, with a 3 per cent yield. Two recent US acquisitions could replicate the systems that have won 9 per cent of domestic corporate travel. Accumulate.

Tox Free Solutions (TOX)

Chart: Share price over the year to versus ASX200 (XJO)

Now one of the largest nationwide players in liquid, solid and hazardous waste management, Tox is focusing on acquiring and integrating high margin businesses. Earnings per share have grown 24 per cent annually for four years and could do better in financial years 2013 and 2014. Recent acquisitions and contracts should bring the price/earnings ratio below 15 times.

SELL RECOMMENDATIONS

Ansell (ANN)

Chart: Share price over the year to versus ASX200 (XJO)

A global leader in health and safety solutions, such as industrial, medical gloves and condoms. Growth in its share price has recently outrun profit expectations, notwithstanding a fall in the Australian dollar. Given the low and unfranked yield, take profits.

Arrium (ARI)

Chart: Share price over the year to versus ASX200 (XJO)

Formerly OneSteel, Arrium has struggled as an over supply of steel and now iron ore are impacting profits and causing writedowns. The scale of its BHP legacy businesses, small against global competition, weighs on its future. Time to move on.

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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.