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Michael Gable, Fairmont Equities

BUY RECOMMENDATIONS

Aveo Group (AOG)

 

Chart: Share price over the year

Our previous look at AOG was here in early May and we predicated a move up towards resistance near $3.20. It reached a new high for the year a few weeks ago by trading above $3. Price action is still bullish and the uptrend is still intact, so that target is still on the cards. In our view, the recent market dip merely provides a second chance buying opportunity at attractive levels. Shares in this retirement village operator were trading at $2.62 on September 3.

BHP Billiton (BHP)

Chart: Share price over the year

We’re not a fan of the sector, but can see an opportunity on the long side for nimble traders. One of our favourite set ups on the weekly chart has now appeared; that is the divergence between price and momentum. In other words, we can see BHP heading to a new low, but momentum, as measured by the relative strength index, has been trending higher during this time. The weekly candlestick chart was also showing a nice piercing pattern last week, which suggests a rally is due. We expect a bounce, with BHP trading up towards resistance at $27 and then possibly as high as $29. The shares were trading at $24.58 on September 3.

HOLD RECOMMENDATIONS

Tabcorp Holdings (TAH)

Chart: Share price over the year

For much of this year, TAH has been developing a broadening formation. This is evident on the chart where the price range continues to widen instead of tightening. If the price range tightens up, then it would be bullish at the top of an uptrend. With widening price action up here, the most probable break is to the downside. TAH should be carefully watched. Short term, we can see a move up to $5, but investors may then look to lighten. If the stock breaks the downside of this pattern, then we expect levels near $3.80 to eventuate fairly quickly. The shares were trading at $4.48 on September 3.

Cimic Group (CIM)

Chart: Share price over the year

Although the stock looks a little expensive, the chart is suggesting the potential for further upside. CIM (formerly Leighton Holdings) has been forming higher lows during the past two years with an obvious ceiling around $23 to $24. It looks like an ascending triangle is forming, which means that a break to the upside could see CIM rally the same distance as the base of the triangle. This implies upside potential to $33. However, until it breaks to the upside, the share price could continue to track sideways or even head lower. At the moment, the chart is neutral and will become very positive on a clear break of resistance.

SELL RECOMMENDATIONS

Village Roadshow (VRL)

Chart: Share price over the year

We had VRL here as a buy in mid April when the market was nudging 6000 points. At the time, it was trading around $5.60 and we argued that the sell off was a buying opportunity. Results in August confirmed a buying opportunity and the stock recently jumped above our $7 target. As VRL has reached our target amid huge outperformance to the market, we now rate it as a sell with a view to taking profits and buying back in on the next dip.

Oil Search (OSH)

Chart: Share price over the year

There was plenty of support for OSH around $7, but since breaching that last month, this support level has turned into resistance. We recently saw OSH rally up towards $7, only to fail. With limited upside in oil and OSH rejecting this resistance level, we would be looking to sell on any positive days with a view that it could again head back towards $5. The shares were trading at $6.88 on September 3.

 

Darren Jackson, Sanlam Private Wealth

BUY RECOMMENDATIONS

Speedcast International (SDA)

Chart: Share price over the year

Another growing telco company which has made a string of earnings per share accretive acquisitions in a similar vein to TPG Telecom (TPM) and M2 Group (MTU). This company operates in the more niche satellite communications space. New contract wins, new acquisitions and stripping out costs will be the key to driving its valuation higher.

Costa Group Holdings (CGC)

Chart: Share price over the year

The valuation of this recently listed horticultural company is attractive at current levels when taking into consideration the defensive nature of earnings and growth potential. However, the stock is trading well below the IPO price of $2.25 and it and may take several months to overcome the stock overhang and flush out the weak hands. Put this on the buy watch list. The shares were trading at $1.895 on September 3.

HOLD RECOMMENDATIONS

Blackmores (BKL)

Chart: Share price over the year

In thebull.com.au on March 16, 2015, we recommended buying this vitamin and supplements company on positive tailwinds it making significant inroads into China. The company recently reported, with group sales up 36 per cent on the previous year to $471.6 million. Chinese buyers were a growing and important contributor to this performance. The stock has more than doubled from our entry price and we continue to let this winner ride. The shares were trading at $111.73 on September 3.

Disruptive Investment Group (DVI)

Chart: Share price over the year

Our deep value buy has so far proven fruitful, with the stock up about 50 per cent from our buy recommendation published in thebull.com.au on June 29, 2015. DVI recently reported. The standout was its investment in iBuyNew, with revenue up 56 per cent and EBITDA up 72 per cent. We continue to hold. The stock finished at 2.2 cents on September 2.

SELL RECOMMENDATIONS

Vision Eye Institute (VEI)

Chart: Share price over the year

Jangho Group, a Chinese curtain maker, has offered a small princely sum for Vision Eye Institute. In our view, the possibility of a superior takeover bid emerging is remote. With VEI trading close to the $1.10 takeover price, we suggest selling on the market to eliminate any downside risk, such as Jangho withdrawing from the acquisition. The shares finished at $1.04 on September 2.

Mineral Resources (MIN)

Chart: Share price over the year

Sector headwinds and margin compression remain. MIN is progressing with a driverless Pilbara monorail system, which will drastically reduce operating expenditures for some Pilbara iron ore miners. Consequently, in building this, the company takes on substantial additional risk and helps sustain the over supply in iron ore in response to  lower operating expenditures.

 

Michael Heffernan, PhillipCapital

BUY RECOMMENDATIONS

James Hardie Industries (JHX)

Chart: Share price over the year

This building products company is an excellent performer, offering attractive fundamentals. Recently, it delivered a strong result, which included a significant special dividend. An improving US building industry is positive for future profitability.

JB Hi-Fi (JBH)

Chart: Share price over the year

The consumer electronics giant posted a most impressive full year result. The Federal Budget’s small business incentives have been positive for JBH. Its outlook is upbeat and it pays a 4.5 per cent fully franked dividend. It should benefit from any improving business and consumer confidence and a slowly improving economy.

HOLD RECOMMENDATIONS

AMP (AMP)

Chart: Share price over the year

Wealth management activity should increase with a stronger sharemarket. AMP’s takeover of AXA Asia Pacific is adding value to its business. Its recent report was quietly impressive and the outlook is positive.

Macquarie Group (MQG)

Chart: Share price over the year

This second tier Australian bank is more diversified than the four majors, and it has been a very strong sharemarket performer in the past 12 months. A stronger greenback is a bonus given it generates a significant amount of revenue in the US.

SELL RECOMMENDATIONS

Orica (ORI)

Chart: Share price over the year

As the mining sector has been experiencing severe headwinds in recent years, the fortunes of Orica have been substantially downgraded. Unfortunately for Orica, it’s now predominantly an explosives manufacturer delivering its products to a challenged mining sector.

Ansell (ANN)

Chart: Share price over the year

A disappointing outlook statement in its last report, which was otherwise quite impressive, has, in my view, blotted the copybook of this former strongly performing company. Until this rubber gloves and condom making company can demonstrate it has resumed a strong profit growth trajectory, I prefer other stocks.

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