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John Rawicki, PhillipCapital

BUY RECOMMENDATIONS

Boral (BLD)

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

Expect Australia’s leading building materials company to benefit from increasing construction of single family dwellings in the US. More activity, coupled with a recent price rise in bricks and concrete across Australia and the US should lift earnings growth this year. I expect the share price to increase towards $6 in coming months. On July 16, the shares were trading at $5.38.

Transurban Group (TCL)

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

This toll road operator in Australia and the US is my top pick in the transport infrastructure space due to its top tier suite of assets and strong growth prospects. Recently trading on 18.8 times fiscal year 2015 earnings and a dividend yield of 5.1 per cent, I believe the stock is attractive to investors looking for growth and income.

HOLD RECOMMENDATIONS

Navitas (NVT)

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

An education services provider in Australia, the UK, Canada, Singapore, Africa and Asia. While the company enjoys a solid earnings and growth platform, plus exposure to a global growth market, it faces a few significant risks along the way. Universities are in-sourcing more frequently, and demand for audio based education is declining. The stock appears fully priced.

Recall Holdings (REC)

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

Provides document management and data protection services. REC is a quality business with good returns on capital amid a stable revenue stream. However, REC’s key revenue drivers are facing longer term structural challenges from competitors launching new technologies. The stock appears fully valued.

SELL RECOMMENDATIONS

GWA Group (GWA)

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

Supplies building fixtures and fittings to homes and commercial premises. Challenges include achieving meaningful price increases given the highly competitive industry, margin focused property developers and limited market share growth options. Recently trading at a 4.4 per cent premium to peers on a fiscal year 2015 earnings basis, I believe the share price faces headwinds.

Coca-Cola Amatil (CCL)

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

I no longer view Coca-Cola Amatil as a defensive safe haven stock in light of earnings downgrades. As a result, I believe it’s overvalued at current levels, and will be subject to greater earnings volatility. Facing stiffer competition and lower margins, better value for shrewd investors lies elsewhere.

 

Michael Heffernan, Lonsec

BUY RECOMMENDATIONS

CSL (CSL)

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

The share price of this world-class blood plasma business has softened in recent times, which only tends to belie its favourable profit outlook. Moreover, CSL has attractive underlying sharemarket fundamentals, is largely unaffected by varying economic conditions and should benefit if the Australian dollar falls.

Sydney Airport (SYD)

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

A major winner from increasing air travel due to lower fares. Revenue from car parking and its extensive retail offering are collateral bonuses. As it has an option to be involved with developing Sydney’s second airport at Badgerys Creek, this provides it with some insurance in relation to a changing future airline environment in NSW.

HOLD RECOMMENDATIONS

Commonwealth Bank (CBA)

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

Still Australia’s premier bank, and investors can also look forward to an attractive dividend when it soon reports. While the impact of the financial planning issue isn’t yet clear, time will tell whether the steps taken by the bank are sufficient to address demands of genuinely aggrieved customers.

Woolworths (WOW)

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

Has held up reasonably well in recent market softness. As a largely non-discretionary retailer, it’s insulated from any slowdown in overall economic activity. While the Masters hardware store rollout hasn’t yet achieved break-even, most other businesses within the retailer are performing well.

SELL RECOMMENDATIONS

Emeco Holdings (EHL)

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

Like others in the mining services area, this heavy equipment rental group continues to struggle as investment in the resources sector eases, and the outlook for the sector generally continues to be uncertain. Conservative investors should look elsewhere.

Pacific Brands (PBG)

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

This apparel maker and distributor recently released a profit downgrade, and like others in the second tier retailing area suffers from generally soft consumer spending. The recent resignation of its CEO only adds to the perception of a company still working on a defined strategy for the future.

 

Darren Jackson, Calibre Investments

BUY RECOMMENDATIONS

Netcomm Wireless (NTC)

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

Netcomm is well positioned to capture the eventual burgeoning demand for wireless connectivity on an industrial scale. NTC has a low risk strategy in partnering with major telcos for contracts in different markets. Recent announcements include contracts with Verizon, Ericsson and Vodafone. We expect the positive news flow to continue.

Servcorp (SRV)

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

Provides executive suites and virtual offices around the globe. The executive suites have been benefiting from a general recovery in the global economy, while virtual offices have been growing in line with expectations. Should SRV’s strong growth trajectory continue, we see value in the company.

HOLD RECOMMENDATIONS

Monash IVF (MVF)

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

Last year, IVF provider Virtus Health (VRT) made a stunning debut on the ASX. In seeking out similar opportunities, Monash IVF came to our attention. MVF offers relative value to Virtus and strong growth prospects in Asia, with a presence already in Malaysia. Now, the IVF market is quite lucrative so margin compression is possible. However, the real risk remains in any changes to government funding of IVF treatment.

Sundance Energy Australia (SEA)

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

We’ve been bullish on unconventional energy and US shale amid recovering Henry Hub natural gas prices. However, with the prevalence of earthquakes in the US state of Oklahoma, we take a more cautious and neutral stance. More specifically, Sundance Energy is one of the major operators in Oklahoma’s Logan County, where tremor activity has increased. Consequently, litigation and regulatory risk increases.

SELL RECOMMENDATIONS

Donaco International (DNA)

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

Donaco operates a strategically located casino in Vietnam near the Chinese border. There’s been no de-escalation in a territorial dispute between China and Vietnam and the two remain at loggerheads. There’s a real risk that trade sanctions may be threatened or implemented by Vietnam as some sort of bargaining chip. This risk is reflected in DNA’s price action. We don’t anticipate an immediate resolution and would look to reduce exposure.

3P Learning (TPN)

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

3P Learning is a very recent IPO. We hold the company in high regard with its market leading mathletics software. However, due to a very high valuation, and our unwillingness to pay for growth, we didn’t bid for any stock in the IPO. In retrospect, this has proved prudent due to its poor performance since listing. Potential overhang exists, as all IPO investor positions are currently under water at July 17.

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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.