Janine Cox, Wealth Within
BUY RECOMMENDATIONS
AMP (AMP)
Chart: Share price over the year
The wealth management company has weathered this year’s market correction better than the big four banks, which fell between 27 per cent and 32 per cent. Provided long term support holds at around $5.60 into December, it’s likely to rise solidly into 2016. The shares closed at $5.74 on November 18.
Retail Food Group (RFG)
Chart: Share price over the year
Not for the faint hearted, RFG sits at the more speculative end of the spectrum. Buyers beware; never see a fall as a reason to buy – unfortunately the uneducated do. More importantly, from a technical perspective, RFG is trading just above 50 per cent of its all time high price of $8 in March 2015. If this level holds and RFG rises strongly above $4.90, it’s likely to continue to around $6 in 2016. The shares closed at $4.18 on November 18.
HOLD RECOMMENDATIONS
CSL (CSL)
Chart: Share price over the year
This blood products group has proved quite resilient in the past six months. Since May, while the rest of the market fell, CSL traded to a new all time high before testing support around $88 in August and September. An important level to watch is $87.70, as a move below this indicates that CSL may trade below $80 in 2016. The shares closed at $96.44 on November 18.
BHP Billiton (BHP)
Chart: Share price over the year
There’s been numerous technical reasons to exit the global miner in the past two years, but for those still holding the stock, the worst is likely to be over. Although BHP is likely to rise in the short term, the analysis indicates the longer term decline isn’t finished. Strong support exists around $17.30, which must hold to stem a further decline to between $13.70 and $16. The stock closed at $19.81 on November 18.
SELL RECOMMENDATIONS
James Hardie Industries PLC (JHX)
Chart: Share price over the year
A close below $16.90 before the end of the year indicates the share price will continue to fall to between $14.50 and $15.50. Shares in this building products company were trading at $16.45 on November 19.
Qantas Airways (QAN)
Chart: Share price over the year
This year, QAN continues to form higher highs on the weekly chart, which is positive. The tell tale sign is the distance in price between them is diminishing. This indicates the risk of a fall is rising. While I believe QAN may initially continue higher, traders need to be vigilant and prepare their exit plan to mitigate the risk in case QAN again falls below $3.50. The shares were trading at $3.805 on November 19.
Darren Jackson, Sanlam Private Wealth
BUY RECOMMENDATIONS
The a2 Milk Company (A2M)
Chart: Share price over the year
The company recently upgraded profit, revising EBITDA from $NZ12 million to $NZ22 million. A strong contributor to this performance was infant formula sales, where demand from China is exceptionally strong. Infant formula now accounts for 47 per cent of group revenue, enabling direct comparisons with Bellamy’s Australia, but with A2M offering considerable relative value to Bellamy’s.
zipMoney (ZML)
Chart: Share price over the year
A disruptive financial tech start-up giving consumers access to competitively priced and responsible credit to spend online without the need for a credit card. A 12-month transaction value target of $10 million was exceeded within a few months of listing. Former PayPal senior executive Jonathan Kelly has joined ZML. A highly speculative buy due to liquidity and the absence of historical earnings.
HOLD RECOMMENDATIONS
iCar Asia (ICQ)
Chart: Share price over the year
We’re in a low growth, low interest rate environment, making mergers & acquisitions all the more attractive. Recently, iProperty Group (a sister company to iCar Asia) received a takeover offer from REA Group (REA). Carsales.com (CAR) has a 20 per cent shareholding in iCar Asia. Carsales.com would be a logical acquirer of the remaining 80 per cent in iCar Asia.
Vitaco Holdings (VIT)
Chart: Share price over the year
Strong momentum continues in the vitamin and supplements space. Since recommending Blackmores (BKL) here on March 16, direct sales to China have soared. This shows the insatiable appetite China has for Australian and New Zealand vitamins and supplements. It validates our view on the sector. With Vitaco up 17 per cent from last month’s buy recommendation, we continue to hold.
SELL RECOMMENDATIONS
BlueScope Steel (BSL)
Chart: Share price over the year
The company recently put out a positive outlook statement, expecting 40 per cent growth in underlying earnings before interest and tax due to cost reductions, a falling Australian dollar and strong Australian demand. However, the outlook did not articulate the difficult trading conditions facing global steel producers. This is demonstrated by weaker steel product prices in China and cautionary market updates by Sims Metals and US Steel. We have reservations about BSL’s forecast and believe it may be revised.
Slater & Gordon (SGH)
Chart: Share price over the year
The UK Serious Fraud Office (SFO) is investigating Quindell. SGH has acquired Quindell’s professional services division. The Australian Securities & Investments Commission is continuing its investigation into Slater & Gordon’s accounting. The company’s share price has fallen more than 60 per cent from its peak, but further downside exists should there be more bad news to come.
Jonathon Howe, Red Leaf Securities
BUY RECOMMENDATIONS
OneVue Holdings (OVH)
Chart: Share price over the year
This platform provider recently acquired Super Managers Australia with more than $1.1 billion in funds under administration. OVH is already showing profitability and positive earnings per share growth and will continue with its forward momentum into fiscal year 2016 and beyond. We believe there’s a lot of upside in these types of businesses that provide administrative services to funds on platforms. I own stock in OVH.
Disruptive Investment Group (DVI)
Chart: Share price over the year
The recent quarterly showed the iBuynew business growing more than 220 per cent on the prior corresponding period. We believe there’s synergies and partnerships that could be formed with other groups. This could be the basis for the next upswing. I own stock in DVI.
HOLD RECOMMENDATIONS
Qube Logistics (QUB)
Chart: Share price over the year
The QUB led consortium driving the current Asciano bid is looking most attractive with QUB looking to acquire the Patrick assets if due diligence prevails. If this occurs, the stock will be re-rated heavily in our view. We believe QUB has the ability to do the deal.
Urbanise.com (UBN)
Chart: Share price over the year
The stock has come off recently, but we believe this information technology company has the talent to disrupt the building services management space. However, revenue needs to start kicking in before we build our positions again.
SELL RECOMMENDATIONS
Blackmores (BKL)
Chart: Share price over the year
Sales growth in China has soared. We believe the stock is starting to trade on hefty valuations, so it’s probably a good time to lock in some profits. A potential headwind is Chinese draft legislation possibly restricting cross-border e-commerce sales. Consequently, products imported to China may need to meet more stringent requirements. Estimates suggest the grey market to China accounted for $70 million of Blackmores sales last financial year.
Bellamy’s Australia (BAL) 
Chart: Share price over the year
The baby formula company is benefitting from enormous sales to China. Baby formula and vitamins have been dubbed Australia’s new “iron ore” export to China. But like iron ore, we believe demand will moderate to more realistic levels. Reducing holdings is healthy and starts to de-risk any downside.
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