Jeremy Hook, TMS Capital
BUY RECOMMENDATIONS
Origin Energy (ORG)
Chart: Share price over the year
The opportunity to buy four new shares at $4 each for every seven shares held at October 6 is one worth taking. The retail offer closes on October 26. By replenishing a stretched balance sheet, ORG has taken the necessary steps to ensure the focus remains on the upside for its seven year commitment to the construction of its 35 per cent owned Australia Pacific LNG project in Gladstone.
Platinum Asset Management (PTM)
Chart: Share price over the year
Platinum has a 21 year history of consistent performance. PTM manages 12 funds under management of about $A27 billion. The company receives management and performance fees and is performing strongly. PTM pays a healthy 4.8 per cent fully franked dividend yield, has a strong balance sheet and top tier return on equity.
HOLD RECOMMENDATIONS
REA Group (REA)
Chart: Share price over the year
The fiscal year 2015 result was strong despite lower levels of online property listings and a self imposed price freeze for the calendar year as the company moves agents onto its new pricing model. With continuing strong housing markets and the new pricing model to kick back in the year ahead offers appeal. The move into Asia and the US offers great long term potential and we continue to hold what we regard as one of Australia’s best growth stocks.
Washington H. Soul Pattinson (SOL)
Chart: Share price over the year
An investment house with a diverse portfolio of assets. It was recently trading at a discount to asset backing with its three key investments (New Hope Corporation, Brickworks and TPG Telecom) all simultaneously moving higher. Although it can be viewed as a fairly boring stock, the long term capital and income returns are second to none. Conservative management, with a strong track record of delivering results, has plenty of skin in the game.
SELL RECOMMENDATIONS
Australian Industrial REIT (ANI)
Chart: Share price over the year
ANI has been stalked by two bidders, but the success of the 360 Capital Industrial Fund (TIX) with its cash and scrip bid means now is the time for holders to fold and accept the TIX bid.
Iress (IRE)
Chart: Share price over the year
Provides financial market data and solutions in Australia and in key offshore markets. Lack of earnings growth and difficulties in the UK arm suggest the stock is more than fully priced and better value exists elsewhere. The shares closed at $9.35 on October 14.
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James Samson, Eureka Report
BUY RECOMMENDATIONS
Dick Smith Holdings (DSH)
Chart: Share price over the year
The share price of this electronics retailer has been punished in recent months. Full year results left investors disappointed, sparking selling momentum to the point where we believe it’s oversold. Our view is the company should at least match fiscal year 2015 dividends in 2016 and grow profit on the back of more store rollouts. In light of this, DSH looks an interesting opportunity.
FlexiGroup (FXL)
Chart: Share price over the year
A non bank lending business with products ranging from credit cards to solar power installation loans. The company’s share price is significantly lower in light of the CEO and two board members departing earlier this year. Also, guidance provided to the market for fiscal year 2016 was conservative, and, as a result, investors have factored in additional risks. Despite the absence of a chief executive, FXL has a clear growth strategy and a strong market position. It’s a good cash generator offering a forecast franked dividend yield near 10 per cent in fiscal year 2016. FXL is a good buy for investors willing to take on a little more risk.
HOLD RECOMMENDATIONS
ANZ Bank (ANZ)
Chart: Share price over the year
Regulatory changes and economic influences sowed seeds of doubts in investor minds as to the future performance of the banking sector. However, ANZ is set to report financial results on October 29 and we feel there’s little risk of a dividend cut. In my view, pressure is likely to build on ANZ’s payout ratio in coming years. In the meantime, ANZ still provides a healthy income stream with a dividend announcement around the corner.
Tox Free Solutions (TOX)
Chart: Share price over the year
A business focusing on waste management. The company’s end market does consist of some out-of-favour resource industry exposure, so pressure on margins exist. However, with a strong capability in dealing with hazardous waste, TOX is well placed to navigate the cycle. A hold is appropriate.
SELL RECOMMENDATIONS
GBST Holdings (GBT)
Chart: Share price over the year
A business specialising in financial software. The company’s performance in the past three years has been outstanding, holding market share in Australia and looking to expand in the US and UK. However, the recent resignation of company CEO Stephen Lake and the deferral of a contract have caused concern. The contract deferral resulted in an earnings guidance downgrade and the share price was punished. We believe the signs of risk warrant caution.
MYOB (MYO)
Chart: Share price over the year
In our view, a disappointing performer since listing in May. The accounting solutions business is embroiled in an arm’s race with competitors Xero, Reckon and Intuit Australia to develop cloud based features and functionality. This has required product investment, but that doesn’t guarantee sales growth. A positive since listing is MYO will book some gains from acquisitions. However, the price still carries expectations for success in a competitive market. My view is there’s still downside risk at these levels. The shares were trading at $3.335 on October 15.
Janine Cox, Wealth Within
BUY RECOMMENDATIONS
Tatts Group (TTS)
Chart: Share price over the year
TTS has risen strongly in recent weeks, well above 50 per cent of the range from the low of $3.45 in September to a high of $4.20 in May. It’s a good sign that a recovery may be underway. However, strong resistance just above $4 indicates it’s important to wait for a strong buy signal before entering. The shares finished at $3.88 on October 15.
Aurizon Holdings (AZJ)
Chart: Share price over the year
The rail freight operator is currently trading sideways. But a strong close above important resistance around $5.25 is likely to support a further rise and the continuation of the longer term uptrend. The stock closed at $5.16 on October 15.
HOLD RECOMMENDATIONS
Challenger (CGF)
Chart: Share price over the year
This investment management firm defied the recent market sell off to achieve a new 12 month high in October. Although short term weakness may see CGF come off the boil in coming weeks, the stock looks promising over the medium to longer term. The shares closed at $7.42 on October 15.
BigAir Group (BGL)
Chart: Share price over the year
Provides cloud based solutions and networking infrastructure. BGL is currently trading in a strong uptrend, just above support around 85 cents. Provided BGL continues to trade above this level in the next four to six weeks, it’s likely to move higher and challenge the all time high of $1.05. BGL finished at 90 cents on October 15.
SELL RECOMMENDATIONS
Echo Entertainment Group (EGP)
Chart: Share price over the year
While the weekly chart of EGP looks strong, shareholders have no compelling reason to sell. However, should the share price fall below $4.63, EGP will have broken the current uptrend line. Consider taking some money off the table and lock in a profit. Shares in the casino and hotel operator closed at $4.88 on October 15.
Carsales.com (CAR)
Chart: Share price over the year
CAR has merely traded sideways in the past two years, with strong support around $9.30. But such levels are often broken. So if sellers take the wheel, CAR may trade to around $8.07 in 2016. The shares closed at $9.88 on October 15.
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.
