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Matthew Felsman, Shaw Stockbroking

BUY RECOMMENDATIONS

Suncorp Group (SUN)

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

This banking and insurance group reports half year results on February 11 and will pay a 40 cent fully franked dividend. It will go ex dividend on February 18. Expect the market to be encouraged by a business restructure, a strong performance from bond investments and a rising housing market building its home loan business.

AMP Capital China Growth Fund (AGF)

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

The Chinese sharemarket was the best performing market in the world last year, rising more than 50 per cent. Just recently, the Chinese Government announced a plan to fast track $US1 trillion in spending to support an annual economic growth rate of 7 per cent. One way you can trade this locally is through AGF, which can be bought and sold like regular shares.

HOLD RECOMMENDATIONS

Qantas Airways (QAN)

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

Qantas has been named the world’s safest airline after a year when fatal air accidents soared above the 10 year average. Qantas reports half year results on February 26 and these should be impressive after a tough few years. Falling oil prices in the past six months means the airline’s fuel bill will be substantially smaller. Fuel taxes and full fares remain in place.

Seek (SEK)

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

Currently expanding into Asia, Seek has very attractive growth prospects. It’s Australia’s number one job search website, and the business focuses on generating high margins and strong earnings growth. In response to overseas business expansion, Seek is forecast to maintain double digit earnings growth over the next two years.

SELL RECOMMENDATIONS

Regis Resources (RRL)

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

We recommended this gold producer as a buy months ago and the stock has performed exceptionally well. But we believe now is the time to lock in some profits. Rumors are circulating that March quarter production could be hampered.

Woolworths (WOW)

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

In the past decade, the Woolworths share price rose 103 per cent. But the shares fell almost 10 per cent in 2014. Generating growth is becoming more difficult as Australian retail sales are softer than expected amid plenty of competition. Recently, 4 per cent of shares on issue were shorted.

 

Michael Gable, Fairmont Equities

BUY RECOMMENDATIONS

JB Hi-Fi (JBH)

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

We previously tipped JBH here at the end of October after its AGM. We noted it had pulled back towards strong support at $14.50 and had also become very oversold when looking at the Relative Strength Index. Following upbeat commentary from the AGM, the shares surged 9 per cent, suggesting short sellers were looking to cover their positions after some better than expected numbers. Having spent more than two months drifting sideways, it continued to look bullish as the sellers were unable to erase only a day’s worth of gains during that time. Now that it’s broken out to the upside of this recent range, we expect it to rally towards the next resistance level in the high $17 levels. We are looking at the prospect of lower interest rates and cheap petrol prices to spur a recovery in the retail sector in general. The shares finished at $16.50 on January 14.

Aristocrat Leisure (ALL)

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

When I last mentioned ALL here in October, we thought it was a sell because the charts suggested some weakness down to $6. Instead of dropping that far, it’s actually tracked sideways despite the market volatility. After its full year results in November, we expect the stock to head higher from here. Apart from the charts looking fairly bullish, we believe the stock is cheap for its particular earnings profile. The US acquisition can provide additional benefits, including some much needed US dollar exposure. The shares closed at $6.58 on January 14.

HOLD RECOMMENDATIONS

CSR (CSR)

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

The breakout from the flag formation a few weeks ago suggests a resumption of the uptrend. If CSR eases back and fails to get back under that breakout point, then we can assume the market will try to push it higher and any dip is a buying opportunity. We would expect resistance to come in around $4.50. The shares finished at $3.64 on January 14.

Automotive Holdings Group (AHE)

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

Trading on a cheap P/E multiple, recent acquisitions will generate cost efficiencies and a more integrated division within a very experienced management structure. In terms of the charts, it’s been trading in a large symmetrical triangle. Often with these symmetrical triangles, the stock will break out about two thirds to three quarters of the way along. This appears imminent. Those already in the stock could do well to continue holding.

SELL RECOMMENDATIONS

Sirtex Medical (SRX)

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

We were previously impressed with the way the stock was trending because it would rally rapidly and the pullbacks were very flat in comparison. However, this has changed, with December’s sell-off appearing impulsive by nature. This is the complete opposite of what we saw before and is a worrying sign. Also, the stock has tried to rally in order to overcome that sell-off, but it’s failed to go to a new high. It appears the dream run is coming to an end and we expect lower levels from this point.

Technology One (TNE)

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

TNE has been trending up nicely for several years. Any pullbacks along the way were fairly flat and the shares were able to overcome any weakness quite quickly. The difference now is the recent sell-off during November and December has been very deep in comparison. It also caused the stock to make a lower low and technically break the uptrend. Since finding a low in early December, TNE has been struggling to overcome that sell-off. At the moment it appears the uptrend is over.

 

James Samson, Lincoln Indicators

BUY RECOMMENDATIONS

G8 Education (GEM)

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

Provides educational childcare services. The company’s share price has suffered due to capital raisings and weak market sentiment. However, GEM management recently issued very strong earnings guidance for the upcoming report in February. GEM offers strong growth potential and an above market fully franked dividend yield. GEM has a strong track record and may present an opportunity to those who missed out a few years ago.

Carsales.com (CRZ)

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

CRZ has long been a favourite among growth investors. The company is poised for further growth by virtue of a continuing shift in business spending towards online advertising. Additionally, CRZ has several interesting international prospects, including SK Encar in South Korea and iCar Asia in South East Asia. The company provided a trading update at its AGM in October, so we expect February’s half year report to be a positive for the business.

HOLD RECOMMENDATIONS

Navitas (NVT) 

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

Provides vocational training and education courses in partnership with universities. Lately, the company’s share price has been volatile, with lower than anticipated enrolment growth rates reported for the third semester. However, we believe the Australian dollar’s decline will support overseas demand for Australian education. Given the business reputation and operating history, the current share price appears to value the company appropriately.

Telstra Corporation (TLS)

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

Recent announcements regarding an accord between Telstra and NBNCo are undoubted positives for TLS investors. The company’s near term cash flow is much more certain and dividends are quite secure. As such, we believe TLS is a good investment for income seeking investors. The market reacted positively to Telstra announcing it would buy Asian telecommunications group Pacnet.

SELL RECOMMENDATIONS

WorleyParsons (WOR)

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

Despite a rich history as a strong growing business servicing global energy and infrastructure markets, lower oil prices are throwing an inevitable question mark over WOR’s future. We anticipate that global energy based capital expenditure will fail to meet expectations in coming years, as fewer projects progress due to lower oil prices. WOR downgraded earnings last year and we expect this year’s conditions will pressure the company’s ability to recover quickly. As such, and despite the already weaker share price, we believe there’s significant risk to demand for WOR.

Fisher & Paykel Healthcare Corporation (FPH)

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

FPH operates in a similar industry to ResMed (RMD), selling medical devices to treat sleep apnoea. While FPH is a relatively promising business, the company’s earnings track record has been inconsistent. Amid a growing competitive landscape in the industry, we believe FPH shares contain risk at current prices. Based on fiscal year 2014 earnings, FPH was recently trading on a price/earnings ratio of more than 35 times. We prefer RMD, given its consistent earnings record in the sector.

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.