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Jon Fernie, Lincoln Indicators

BUY RECOMMENDATIONS

Henderson Group PLC (HGG)
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Chart: Share price over the year

A global investment manager. The company manages more than £80 billion across equities, fixed income and alternative assets. The group targets net inflows of between 6 per cent and 8 per cent of assets under management each year and has a good investment track record. Recent weakness in markets has impacted the share price, although we continue to view the outlook as positive. Given the offshore earnings profile, investors will also benefit from any depreciation in the Australian dollar.

Cover-More Group (CVO)
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Chart: Share price over the year

A travel insurance and medical assistance business with operations in Australia, New Zealand, the UK and Asia. The group has a strong position domestically with an estimated 40 per cent of market and distribution agreements with leading travel agents, such as Flight Centre and Helloworld. Despite soft market conditions, management indicated at the group’s annual general meeting that travel insurance sales were tracking well. We expect the group to deliver robust earnings growth in fiscal year 2016 driven by product launches, more domestic contract wins and expansion overseas through partnerships. 

HOLD RECOMMENDATIONS

Ramsay Health Care (RHC)
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Chart: Share price over the year

A global private hospital operator with facilities in Australia, the UK, France and Malaysia. The recent share price dip appears to be a response to potential regulatory risks and pressure from private health insurance firms. Overall, we believe these risks are outweighed by strong brownfield expansion and acquisition opportunities across all regions. RHC also retained guidance at its annual general meeting for underlying earnings growth of between 12 per cent and 14 per cent in fiscal year 2016.

JB Hi-Fi (JBH)
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Chart: Share price over the year

The company reported a solid first quarter trading update with sales up almost 4 per cent on a comparable basis. Management reiterated guidance for total sales of $3.85 billion in fiscal year 2016 driven by organic growth and further store rollouts. While providing an attractive combination of growth and income, the stock currently trades at a premium to our valuation.

SELL RECOMMENDATIONS

Aurizon Holdings (AZJ)
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Chart: Share price over the year

A rail freight company with operations across Australia. The group hauls coal, iron ore and other mineral, agricultural and industrial products. Aurizon downgraded earnings guidance in December and revealed impairments would be reported in the first half. The group continues to implement a cost reduction program. Given ongoing pressure on iron ore prices and weaker coal volumes, we view the outlook as clouded moving forward.

Orica (ORI)
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Chart: Share price over the year

Makes chemicals and commercial explosives and supplies more than 100 countries. The group reported a weaker fiscal year 2015 result after substantial impairments. In our view, Orica faces challenging conditions in the mining sector and an over supplied ammonium nitrate market. We expect further pressure on earnings in the year ahead. While management is taking steps to restructure the business and reduce costs, we see better alternatives in other sectors.

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Jonathon Howe, Red Leaf Securities  

BUY RECOMMENDATIONS

OneVue Holdings (OVH)
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Chart: Share price over the year

The superannuation services provider has performed well in the past four months. OVH is growing its custodial business, and its competitor Link Administration Holdings (LNK) was recently at an all-time high. We are bullish about the sector and the outlook for OVH. The shares were trading at 78 cents on January 27. I own OVH shares.

Transaction Solutions International (TSN)
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Chart: Share price over the year

Provides banking and financial services in India. TSN is one of the few ASX listed stocks providing access to the Indian macro theme. We would expect the share price to respond positively to any contract win involving automatic teller machines or mobile kiosks. On January 27, we also note that investment company Copulos Group owns a 6.47 per cent stake in TSN. I also own TSN shares. A speculative buy.

HOLD RECOMMENDATIONS 

 

Medibank Private (MPL)
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Chart: Share price over the year

The company has performed well since its IPO in late 2014. The sector is conservative and marginally grows each year. It’s a solid defensive stock and therefore makes a good addition to a portfolio.

Crown Resorts (CWN)
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Chart: Share price over the year

Speculation exists that James Packer may privatise the business. Speculation is one thing, doing it is another. The stock is trading well below its 2014 highs. The stock will re-rate significantly to the upside if privatisation was to become a reality. But you can’t rely on speculation.

SELL RECOMMENDATIONS

Wesfarmers (WES)
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Chart: Share price over the year

The company recently announced that it’s taking the Bunnings hardware brand to the UK via its $705 million acquisition of home improvement chain Homebase. Australian companies have a poor track record of expanding into foreign markets. Investors should consider reducing their exposure to this industrial conglomerate. 

Yowie Group (YOW) 

Chart: Share price over the year

The chocolate maker has successfully broken into the US market via an arrangement with Walmart. However, in order to meet the strong demand for chocolate, my view is YOW may need to raise more capital. Investors may want to consider taking some money off the table at these levels and wait for a possible re-entry on a potential capital raising. However, my view is purely speculative. I have no financial interest in YOW.

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Gavin Wendt, MineLife

BUY RECOMMENDATIONS

Sheffield Resources (SFX) 


Chart: Share price over the year

SFX is one of our most highly regarded bulk commodity exposures. Its world class Thunderbird mineral sands project in Western Australia hosts a large, high grade zircon rich resource, where Sheffield is targeting first mineral sands production during 2017. Sheffield has advised of a maiden ore reserve for Thunderbird, which importantly supports a 40-year mine life as outlined in the pre-feasibility study late last year.

Talisman Mining (TLM)


Chart: Share price over the year

The company has performed strongly in the past six months as the market digests the commercial significance of the massive sulphide hits being generated by its ongoing Monty drilling campaign – the first significant, high grade, massive sulphide, copper and gold discovery outside of Sandfire Resources’ DeGrussa copper deposit. It recently discovered bornite mineralisation has the potential to enhance overall project economics.

HOLD RECOMMENDATIONS

Transerv Energy (TSV)


Chart: Share price over the year

Drilling of two appraisal wells on its undeveloped Warro gasfield within the Perth Basin continues to generate strong interest. The company has a heavy hitting joint venture and off take partner in Alcoa, which is earning a 65 per cent stake through the expenditure of $100 million. Transerv has just announced a more than doubling of its Warro Contingent gas resource.

Metalicity (MCT)


Chart: Share price over the year

Finalised the acquisition of the Admiral Bay project, one of the world’s biggest undeveloped zinc projects. There’s significant scope for a resource upgrade and expansion given mineralisation has been intersected along an 18 kilometre  strike length. 

SELL RECOMMENDATIONS

Newcrest Mining (NCM)


Chart: Share price over the year

The gold stock has recovered in recent months, but this represents an opportunity to take profits. I believe it continues to be negatively impacted by underperforming operations, such as Lihir Island and other short duration assets. Newcrest is likely to fast track operations, such as the Wafi-Golpu project in Papua New Guinea, or sift out acquisitions in order to maintain its production profile. 

BHP Billiton (BHP)


Chart: Share price over the year

The fall from grace is shown by a share price trading at $15.08 on January 28. Investors reacted to failed corporate deals encompassing Pilbara iron ore, Rio Tinto and Potash Corp of Canada. Add to the mix excessive and ill-timed spending on iron ore expansions at a time of falling Chinese demand. Also, include the environmental catastrophe in the form of the Samarco disaster in Brazil. In my view, the company has a poor decision making record. 

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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.