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Richard Batt, Shadforth Financial Group

BUY RECOMMENDATIONS

SMS Management and Technology (SMX)

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

SMX provides a range of IT consulting services to a diversified portfolio of government and private sector clients. With a strong balance sheet and no debt, the company is well placed to make acquisitions and provides a great exposure to the IT sector for long term portfolios.

BHP Billiton (BHP)

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

Well managed and provides investors with world class exposure to the resources sector. Investors have been overlooking resource stocks in favour of high yielding companies. BHP is likely to be a major beneficiary of any improvement in the global growth outlook and demand for commodities. Long term investors should establish a holding in BHP.

HOLD RECOMMENDATIONS

Breville Group (BRG)

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

BRG’s share price has drifted back in the past six weeks after a reaching a high of $9.24. The company’s product development and brand management, along with its growth in international markets and strong balance sheet, position BRG to take advantage of future growth opportunities. We recommend long term portfolios continue to hold. The shares closed at $7.85 on November 13.

Coca-Cola Amatil (CCL)

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

Offers a strong track record and an extensive distribution network. The share price has drifted back following a third quarter update, in which the company indicated that its market share had increased, but the post election up-tick in sales had not eventuated. We are still comfortable with the outlook for the company and happy to retain exposure.

SELL RECOMMENDATIONS

Domino’s Pizza Enterprises (DMP)

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

DMP is the largest pizza chain in Australia. The company’s share price has gone from strength-to-strength and recently hit an all time high. This is an opportune time to take some profits.

JB Hi-Fi (JBH)

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

At its recent annual general meeting, JBH retained its fiscal 2014 guidance for sales to increase by 6 per cent to 8 per cent on last year. Since the start of this financial year, JB’s share price has risen about 30 per cent due to increasing consumer confidence buoyed by low interest rates. Based on current share price movements, we suggest investors look at taking advantage of the strong share price and lock in some profits.

 

Peter Moran, Wilson HTM

BUY RECOMMENDATIONS

ANZ Bank (ANZ)

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

Reported good results driven by volume growth combined with solid cost control. We see the momentum continuing and believe ANZ will outperform peers over the medium term due to exposure in the higher growth markets of Asia and a recovery in the institutional business.

Nextdc (NXT)

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

The Next business continues to grow with utilisation increasing, while the order pipeline is also expanding. The Sydney centre is now open and the Perth data centre appears to be on time and budget. With a large portion of construction risk now bedded down, the focus is on converting the pipeline to revenue.

HOLD RECOMMENDATIONS

Coca-Cola Amatil (CCL)

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

The beverage company recently provided an update and expects 2013 earnings before interest and tax to fall between 5 per cent and 7 per cent. While volumes have increased, this has been more than offset by weaker prices due to aggressive competition. CCL was recently trading on a price/earnings ratio of 17 times, so we recommend a hold.

Commonwealth Bank (CBA)

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

CBA delivered a strong update driven by higher trading income and a reduction in bad and doubtful debts. We expect the bank to deliver another strong result for the full year, but we believe this is already factored into the share price as it’s trading at a 10 per cent premium to peers.

SELL RECOMMENDATIONS

Iluka Resources (ILU)

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

We have reduced our pricing expectations for various mineral sands based on current market supply and demand. Using these lower price assumptions, ILU is trading 10 per cent above our valuation, so we downgrade to a sell.

Fortescue Metals Group (FMG)

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

We have downgraded the iron ore producer to a sell following a recent strong share price run. FMG is now trading 30 per cent above our valuation. We prefer BHP and Rio Tinto, which are both trading at discounts to our valuation.

 

Boe Campion, Ord Minnett

BUY RECOMMENDATIONS

Woolworths (WOW) 

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

Momentum in the company’s Australian food and liquor business is improving and closing the gap on Coles, while further cost savings will support margin expansion. The stock has valuation support, with increasing confidence in its growth profile.

Woodside Petroleum (WPL)

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

We recently upgraded our Woodside recommendation. We feel the stock has lagged large cap peers and is leveraged to tight LNG markets via its ongoing contract re-negotiations, which we anticipate will begin to show through for Pluto from the 2014 second half.

HOLD RECOMMENDATIONS

Bank of Queensland (BOQ)

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

Bank of Queensland’s new management team is delivering on repairing the balance sheet and improving operational capability. An improved funding position and credit rating upgrade are likely to support a better-than-expected net interest margin in future and provide some capacity for growth.

Telstra (TLS)

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

In the past three years, Telstra has been locking down regulatory risk via an NBN agreement, investing in mobile to offset declining fixed revenues and cutting costs. This continues unabated as the company strategy is aimed at new growth areas.

SELL RECOMMENDATIONS

Amcor (AMC)

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

Retail scanning data and recent announcements from international food, beverage, health care and personal care manufacturers highlight a consistent theme of volume weakness driven by challenging macro economic conditions. While the packaging giant exhibits a proven execution capability and the potential for incremental earnings growth – through the reallocation of accelerating free cash flow into value-creating acquisitions and/or buybacks – we believe this is more than reflected in its share price.

Ansell (ANN)

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

Fiscal year 2014 is shaping up in a similar way to the previous year for this protective gloves and condom making company. Mixed political and economic conditions are limiting the pace of improvement in what we consider a disappointing 2014 first quarter.

Click on the links below to read other articles from this week’s newsletter

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2. 7 biotech stocks with bounding share prices: Some biotech stocks have been running hard…

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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.