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Scott Marshall, Shaw Stockbroking

BUY RECOMMENDATIONS

Magellan Financial Group (MFG)

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

MFG reported a funds under management and performance fee update for December 31, 2013. We have upgraded 2014 earnings per share between 2 per cent and 3 per cent and 2014 dividends by 2 cents a share. We forecast that MFG will pay out all its franking credits and a first half dividend of 17 cents. MFG is a compelling investment proposition, which keeps on performing and generating funds inflows.

Transurban Group (TCL)

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

Offers growth opportunities from existing and potential new toll roads. In the December quarter, all toll roads performed as expected. CityLink toll revenue was up 7.9 per cent and Hills M2 toll revenue was up 35.3 per cent, benefiting from recently completed road widening (new lanes) and new access ramps. Upside is expected from several major toll road developments in the Sydney, Melbourne and Washington regions.

HOLD RECOMMENDATIONS

Beadell Resources (BDR)

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

Although December quarter production and costs have underperformed our estimates, we view management’s efforts as a positive and continue to view the stock as fairly valued at current levels. The gold producer’s shares closed at 79.5 cents on January 15.

Sydney Airport (SYD)

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

A solid story, offering potential construction revenue (car parks, hotels, commercial) and aggressively targeting discount air traffic from Asia. The second airport saga in Sydney will have to come to a head soon, and SYD will have to decide its role in the potential project. The shares closed at $3.75 on January 15.

SELL RECOMMENDATIONS

GUD Holdings (GUD)

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

Guidance for the 2014 first half suggests a possible 30 per cent reduction in earnings before interest and tax on the previous corresponding period. We don’t believe this household appliances company deserves its current price/earnings multiple. The dividend may come under pressure.

Wotif.com Holdings (WTF)

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

WTF, a travel website, has announced net profit after tax for the half is expected to range between $21.9 million and $22.6 million, a significant decline on the $27.5 million reported in the prior half year. The outlook for the 2014 second half remains volatile.

 

Michael Heffernan, Lonsec

BUY RECOMMENDATIONS

Macquarie Group (MQG)

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

A second tier Australian bank, which is more diversified than the four majors and has been a very strong sharemarket performer in the past 12 months. Additionally, stronger sharemarket activity should be of material assistance to both its revenue and profit.

Transurban Group (TCL)

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

Australia’s premier toll road operator is looking forward to strong growth following its proposed purchase of the Sydney Cross City Tunnel at a good price, and the Federal Government’s commitment to road expenditure.

HOLD RECOMMENDATIONS

Slater & Gordon (SGH)

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

This is Australia’s first listed legal firm and one of the best mid capitalisation share price performers in 2013. Recent acquisitions in the UK continue to build on its past success, while its domestic operations are also progressing well. The prospects for Slater & Gordon remain positive.

Seek (SEK)

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

Online job searching is becoming an increasingly important way to source employment opportunities and Seek is pre-eminent in this area with first mover advantage. Its growth prospects are also favourable with its expansion into China. Its education market seems to be working well.

SELL RECOMMENDATIONS

Boom Logistics (BOL)

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

This crane operator, heavily focused on the resources sector, has experienced difficulties in the past few years in response to major mining companies cutting back capital expenditure. A prudent approach for investors may well be to wait until its future profitability can be confirmed.

Cabcharge Australia (CAB)

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

The company is facing challenging times in response to government regulation changes on top of increasing competition in the provision of financial services to the taxi industry. Until more clarity emerges, particularly on the Victorian Government’s regulatory stance, investors can afford to be patient.

 

Darren Jackson, Calibre Investments

BUY RECOMMENDATIONS

iBuy Group (IBY)

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

iBuy is a new listing from the Catcha Group. The same people are behind iCar Asia (ICQ) and iProperty Group (IPP) and have a successful track record. The company’s newest venture into online retailing already has market share and strong revenue growth. On a revenue multiple, there’s a huge valuation gap between IBY, ICQ and IPP, with IBY offering deep relative value.

NextDC (NXT)

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

NextDC is the only independent nationwide data centre provider in Australia. This makes it strategic and unique. Short term trading of the stock is quite perplexing. However, longer-term, the fundamentals couldn’t be clearer. News flow has been strong, with NextDC recently signing Telstra as a client. We expect positive news flow to continue and the company to be re-rated.

HOLD RECOMMENDATIONS

Carsales.com (CRZ)

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

Due to a talented management team, we have been in awe of CRZ’s ability to win market share and continually grow revenue and earnings year-on-year. However, amid a mature Australian market, heightened competition from rivals and some discontent from its paying users, we are wary that CRZ’s successes may not continue forever. If so, the high P/E ratio will come into question.

Magellan Financial Group (MFG)

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

Strong tailwinds continue for fund managers mostly through mandatory super fund increases. What distinguishes Magellan from the rest is that most of its funds are invested offshore, so it benefits from a falling Australia dollar. Additionally, its monthly fund inflows and mandate wins are bordering on the exceptional.

SELL RECOMMENDATIONS

Ausdrill (ASL)

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

The operating environment for drillers still remains bleak mostly due to reduced exploration spending and tightening margins. Although Ausdrill may appear cheap from a trailing earnings perspective, the low valuation accurately reflects what we consider to be poor quality and varied earnings. It carries significant tail risk into the reporting season and, in our view, is one purely for traders.

Mineral Resources (MIN)

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

A few red flags have left us with a more cautious outlook. A fatality last year at Fortescue’s ore processing facility was, at the time, operated by MIN. Another is the move by the major miners to internalise their ore processing, which could pressure MIN’s revenue stream.

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.