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Simon Herrmann, Wise Owl

BUY RECOMMENDATIONS 

Carsales.com (CAR)

Chart: Share price over the year 

The market leader in the Australian online advertising sector for vehicles sales. CAR has achieved average top line growth of 21 per cent per annum over the past five years. Sustaining the trend is the major near term driver. So CAR is focusing on domestic and overseas expansion, which is starting to materialise. 

Harvey Norman Holdings (HVN)

Chart: Share price over the year 

The retail giant has recorded average profit growth of 20 per cent over the past four years. While its domestic operations remain robust, overseas revenue is growing at a solid pace. The annual fully franked dividend is forecast to yield 5 per cent.

HOLD RECOMMENDATIONS

Freelancer (FLN) 


Chart: Share price over the year 

We retain our hold recommendation and reaffirm our price target of $1.75. The outsourcing company is experiencing strong momentum on all fronts and is on track to deliver positive operating cash flow. The long term outlook remains favourable. The shares finished at $1.39 on February 11.

Woolworths (WOW)


Chart: Share price over the year 

The company has a long history of delivering shareholder value and sustainable growth. We expect 2016 earnings to be 25 per cent to 30 per cent below the previous corresponding period. But upside stems from the planned exit of the loss-making Masters home improvement business. 

SELL RECOMMENDATIONS

Broadspectrum (BRS)


Chart: Share price over the year 

Formerly known as Transfield Services, the company has struggled to find a direction for years. The planned takeover of BRS by Ferrovial is hanging in the balance amid uncertainty regarding Federal Government contracts. Even though earnings appear robust, we expect ongoing volatility in the short term. 

Ten Network Holdings (TEN) 


Chart: Share price over the year 

We struggle to make a bullish case for TEN as viewers shift to online streaming providers, such as Netflix. The viewing future is online, making it ever more challenging for free to air networks to compete for revenue and retain audiences. Ten’s share price is trading at multi year lows. The shares closed at 95 cents on February 11.


James Samson, Eureka Report

BUY RECOMMENDATIONS 

DWS Limited (DWS)


Chart: Share price over the year

This information technology company delivered adjusted EBITDA above $12 million, and is on track for a strong lift in net profit for fiscal year 2016. Two acquisitions, Phoenix and Symplicit in 2015, offer additional earnings. The strong result has lifted the share price in a weak market, but there may be further upside if the company can deliver for the full year. Our valuation is $1.48. The shares closed at $1.275 on February 10.

FlexiGroup (FXL) 


Chart: Share price over the year

A diversified provider of consumer credit, mostly via credit cards, and no interest retail loans. Much of the FXL business is point of sale retail finance, and the company has a strong operating record. After acquiring New Zealand’s Fisher & Paykel Finance in 2015, the company’s growth potential has been enhanced. At current prices, FXL offers value for those seeking a strong yield and good growth potential. 

HOLD RECOMMENDATIONS 

Caltex CTX) 


Chart: Share price over the year

Caltex has performed well lately, buoyed by the benefits of lower oil prices and higher refining margins. Additionally, the retail network known as the marketing division has also delivered increasing profits. While lower oil prices are likely to deliver ongoing benefits, it’s already factored into the share price.

CTI Logistics (CLX)


Chart: Share price over the year

A transport company impacted by the downturn in mining activity. However, falling fuel prices have offered margin relief. While times are tough, CLX is in a good position and the downside has been largely priced in. Investors should be cautious about lower liquidity in CLX shares.

SELL RECOMMENDATIONS 

UGL (UGL) 


Chart: Share price over the year

Times are tough for engineering and construction contractors. The sector is experiencing significant margin pressure. Competition in the construction industry is fierce given a subdued economy and cuts to mining sector expenditure. Better options elsewhere.  

Insurance Australia Group  (IAG)


Chart: Share price over the year

Growth in the general insurance sector has been soft. With costs across the sector continuing to rise, rival Suncorp has already provided a profit warning to the market. While we expect premiums to start rising in the next 12 months, they will probably lag cost inflation, so margins will be pressured. As a result, we believe risks remain in IAG.


Les Szancer, AXL Capital Partners

BUY RECOMMENDATIONS

Dongfang Modern Agriculture Holding Group (DFM)


Chart: Share price over the year

This citrus growing company listed in October last year and hasn’t looked back. Since listing, the share price has risen 45 cents to close at $1.45 on February 11. I like the business as it’s profitable, has no debt and has no distribution or warehousing costs. It sells every single piece of fruit. The company is acquiring more farm land to increase harvests. It offers good growth potential. 

American Patriot Oil & Gas (AOW)


Chart: Share price over the year

An interesting company and business model. The company buys previously mined oil and gas leases for a good price. It then joint ventures with a partner who pays for drilling. Its first venture in the Cooper Basin landed a significant premium. It’s geographically focused on oil and gas exploration and development opportunities in the Rocky Mountain Basins. It may be a takeover target. The shares closed at 14.5 cents on February 11.

 

HOLD RECOMMENDATIONS

Condor Blanco Mines (CDB)


Chart: Share price over the year

This company has tested the patience of investors. But at its last AGM, the company said it was negotiating with potential partners. Mining may be a thing of the past. I think it’s worth holding to see what transpires.

County International (CCJ)


Chart: Share price over the year

Has moved away from a coal only company to start a bulk port facility. It’s a massive shift in focus and a much more difficult project to put together. Investors have no appetite for patience, as evidenced by the current share price of less than a cent on February 11. When the port does come together, the share price should respond positively.

SELL RECOMMENDATIONS

Arrium (ARI)


Chart: Share price over the year

Once it was known as OneSteel, now it’s Arrium – the name change doesn’t matter. In the past, I have recommended selling this out of favour steel stock at higher prices. The stock was trading at 5 cents on February 11. 

Lynas Corporation (LYC)


Chart: Share price over the year

How the mighty have fallen. It was about $2.50 a share a few years ago. Rare earths are called rare for a reason and are difficult to mine and have long lead times. It was trading at 7.6 cents on February 11. Is it a buy at this price? The punters don’t seem to think so and it’s the punters who ultimately dictate the share price.

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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.