Jonathon Feil, Morgans

BUY RECOMMENDATIONS

Sundance Energy Australia (SEA)


Chart: Share price over the year

Company shares have been under pressure following considerable weakness in the oil and gas space. The company is taking prudent steps in the current oil price environment to reduce costs, with all-in costs of between $US10.50 to $US12.50 a barrel. The price fall looks like an over-reaction, as funds have been forced to sell in response to market capitalisation falling below $50 million.

Australian Vintage (AVG)


Chart: Share price over the year

I believe the shift away from bulk wine sales to branded wine sales, debt reductions, the recent free trade agreements with China and the success of Treasury Wine Estates will be positive for AVG’s share price. The key thing is the continuing execution of its transformational strategy like that of TWE.

HOLD RECOMMENDATIONS

Lucapa Diamond Company (LOM)


Chart: Share price over the year

The stock enjoyed a healthy rise recently on the back of a 404 carat diamond find. At this stage, we’ve been happy to take some profit on the news because the stock has a tendency to settle as investors await further discoveries. We will eagerly await further discoveries at mining blocks 6 and 8 and continuing success in chasing substantial pipe networks.

Brambles (BXB)


Chart: Share price over the year

Overall, a solid result, but more for the upgraded guidance than the result itself. Underlying EBIT growth of 10 per cent to US$474 million was in line with expectations. The pallets business division exceeded expectations, but investors must be mindful of the currency benefit. 

SELL RECOMMENDATIONS

Aurizon Holdings (AZJ)


Chart: Share price over the year

First half 2016 underlying EBIT was down 17 per cent on the prior corresponding period. The rail freight operator may not meet its margin target this year and we believe future targets are unlikely to be achieved. We believe the business outlook is cloudy, so we’re happy to be a seller.

Ansell (ANN)


Chart: Share price over the year

This rubber gloves and condom company has enjoyed a nice 20 per cent bounce since posting below consensus results. Fiscal year 2016 guidance was downgraded by about 10 per cent. We conclude lower profit is due to weaker emerging markets and variations in short term operations. 


Warwick Grigor, Far East Capital

BUY RECOMMENDATIONS

Beadell Resources (BDR)


Chart: Share price over the year

A new board and management team has been appointed to address an extended period of underperformance. The market has welcomed the new team, and the rising gold price is a good backdrop for a classic turnaround scenario. A strong breakout from the downtrend provides the final tick. Better times ahead for this Brazilian gold producer.

Red River Resources (RVR)


Chart: Share price over the year

Zinc is enjoying a favourable demand and supply equation, so it makes sense to have a zinc play. RVR looks a standout due to minimal capital expenditure of $18 million – plus working capital – required to bring the Thalanga zinc project back on stream, rather than spend more than $100 million on a new plant. It will take six months to recommission with sufficient resources for a five year life, but first it needs to secure finance. There’s great exploration potential due to extensive land holdings over the Mt Windsor Belt. New technology enables exploration beneath the surface for the first time. 

HOLD RECOMMENDATIONS

Orinoco Gold (OGX)


Chart: Share price over the year

Development of the high grade Cascavel gold mine is continuing. A specialist mining fund is doing due diligence, with a view to making a substantial investment. Irrespective of this possibility, we should see good gold production soon. I own shares and options in the company. 

Lucapa Diamond Company (LOM)


Chart: Share price over the year

LOM recently unearthed a 404 carat diamond – a rare find. Diamond production has continued to yield impressive and high value stones. This has implications for the quality of the kimberlite pipe, which is undergoing confirmation drilling. It’s been a long journey, but we believe a re-rating is imminent. Keep holding to potentially maximise value. I own shares and options in the company.

SELL RECOMMENDATIONS

Australian Pacific Coal (AQC)


Chart: Share price over the year

Nathan Tinkler recently resigned as managing director. The company has done a deal with the Dartbrook coal mine in the Hunter Valley. In my view, the thermal coal market has a very uncertain future. With a market capitalisation of more than $70 million, it’s difficult to see value. 

Paringa Resources (PNL)


Chart: Share price over the year

PNL has performed well in a hostile coal environment. While this is a credit to non-executive chairman Ian Middlemas, it flies in the face of coal sector dynamics. The Obama Administration is committed to blocking thermal coal power station developments, providing yet another headwind for the company. It’s too early to be calling a turnaround, so the stock should be avoided for now. 


Matthew Litchfield, PhillipCapital

BUY RECOMMENDATIONS

Ramsay Health Care (RHC)


Chart: Share price over the year

A recent price correction leaves the private hospital operator at attractive entry prices. Ramsay enjoys a dominant position in private hospitals, offering growth yet defensive earnings. Favorable trends, such as an ageing population, also provide a tailwind.

G8 Education (GEM)


Chart: Share price over the year

According to G8’s recent report, net profit after tax increased 68 per cent to $88.6 million for the 12 months to December 2015. The final dividend was 6 cents. This is a positive result for the childcare provider and we see further opportunities for it to make well priced acquisitions into the future.

HOLD RECOMMENDATIONS

Brambles (BXB)


Chart: Share price over the year

Recently posted a solid half year report and our investment outlook remains positive. The highlight for us is the growing momentum in the US, which contributed to a 17.2 per cent return on capital. BXB is also looking to expand into big data by embedding sensors, which can track deliveries and provide valuable data in real time. This should be positive, but the price is close to our fair valuation.

Transurban (TCL)


Chart: Share price over the year

The toll road owner and operator reported strong half year results earlier in February. Dividends are also attractive. The share price has risen after a recent market pullback. Retain this infrastructure stock.

SELL RECOMMENDATIONS

Medibank Private (MPL)


Chart: Share price over the year

Half year net profit after tax rose more than 50 per cent to $227 million. It’s been a good defensive stock since its IPO in November 2014. However, investors looking for more capital appreciation may wish to reduce MPL holdings by switching to growth stocks.

Incitec Pivot (IPL)


Chart: Share price over the year

The commercial explosives market faces headwinds due to lower commodity prices. Consequently, this stock has underperformed the market so far in 2016. The stock is overvalued at these levels, according to our research. It may be a good time to look at other sectors. 

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