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Matthew Felsman, APP Securities

BUY RECOMMENDATIONS

BetaShares Australian Equities Strong Bear Fund (BBOZ)


Chart: Share price over the year

Clients have been building short positions from 5150 points on the S&P/ASX200 via BBOZ, forecasting the end of the current counter trend rally between 5200 to 5300 points. A 1 per cent fall on the Australian sharemarket on a given day can be expected to deliver a 2 per cent to 2.75 per cent increase in the value of the BBOZ ETF.

Ramsay Health Care (RHC)


Chart: Share price over the year

The recent market advance has been led by underperformers and heavily shorted stocks. Recent positive sentiment has largely ignored the healthcare sector, creating an opportunity. RHC fell recently after a broker downgrade. I am a buyer closer to $62. Perceived as a defensive stock also makes it attractive due to my longer term negative outlook.

HOLD RECOMMENDATIONS

Telstra Corporation (TLS)


Chart: Share price over the year

Clients recently picked up TLS around $5. Hold for a relatively safe yield and excellent risk versus reward. If equity markets enter tougher times in 2016 and 2017, TLS is likely to be an outperformer, so it offers portfolios a good balance.

Qantas Airways (QAN)


Chart: Share price over the year

Enjoyed a remarkable reduction in operating costs courtesy of a fall in jet fuel from $3.29 a gallon in January 2014 to $1.22 a gallon today. Another positive was growing passenger numbers. Hold for the mid term. It looks good from a price/earnings to growth point of view.

SELL RECOMMENDATIONS

Oil Search (OSH)


Chart: Share price over the year

We recommended OSH as a buy to thebull readers in February when it was trading around $6.20. The stock recently rallied to a high of $7.69. In this environment, I view energy and material companies as trades only due to continuing volatility leaving them as price takers and not in control of their profits. Our buy recommendation anticipated an oil short squeeze. Now is the time to trade out.

Regis Resources (RRL)


Chart: Share price over the year

On November 16, the shares were trading around $2 when we recommended this gold producer as a buy to thebull readers. On February 9, the stock was priced at $2.83. A quality stock, but heavily exposed to moves in the gold price and the Aussie dollar. After a strong short term run, take profits and look to re-enter on a dip. The shares were trading at $2.27 on March 17.


Michael Heffernan, PhillipCapital 

BUY RECOMMENDATIONS

Adelaide Brighton (ABC)


Chart: Share price over the year

This building materials company is benefiting from strong growth in residential construction following a prolonged period of low interest rates. It has attractive fundamentals, pays a reasonable dividend and its interim report was impressive.

Macquarie Group (MQG)


Chart: Share price over the year

The strong share price recovery after a sudden decline suggests it’s now back on track. While a lower Australian dollar is positive for revenue generated in the US, a consolidation of improvements in overall sharemarket activity should lift revenue and profit.

 

HOLD RECOMMENDATIONS

Medibank Private (MPL)


Chart: Share price over the year

The health insurer delivered a better than expected half year report and pays an attractive fully franked dividend yield of between 3 per cent to 4 per cent. The recent increase in premiums is an added catalyst for its future profitability. Also, its recent tougher stance in negotiating with private hospitals may be a prudent move in today’s competitive health fund arena.

BWP Trust (BWP)


Chart: Share price over the year

The landlord of Australia’s iconic home improvement chain delivers a strong dividend yield of about 5 per cent. Although the yield is unfranked, it provides stability in a period of market uncertainty. Having a tenant like Wesfarmers is a great asset for any real estate investment trust.

 

SELL RECOMMENDATIONS

Cover-More Group (CVO)


Chart: Share price over the year

This travel insurer’s share price has been disappointing in the past year. However, it’s hardly surprising, as a weaker Australian dollar has acted as a disincentive to travel overseas. The weaker Aussie dollar has been a negative for travel insurers. Better options elsewhere.

Crown Resorts (CWN)


Chart: Share price over the year

Weak market conditions had a negative impact on its Macau casino revenue and profits. The sluggish Australian economy is unhelpful for this discretionary leisure business. Other stocks appeal more.


James Samson, Eureka Report

BUY RECOMMENDATIONS 

G8 Education (GEM)


Chart: Share price over the year

Provides childcare services and was recently trading on a dividend yield of about 6.5 per cent (9.4 per cent if franking value is included). We believe GEM is attractive to investors chasing income, but it has the added benefit of a growth profile with a strong track record of profit growth. Our valuation is $4.12. The shares were trading at $3.72 on March 17. The next quarterly dividend is payable in April, with the stock trading ex-dividend on March 23.

XTD Limited (XTD) 


Chart: Share price over the year

Provides outdoor digital advertising at train stations in Australia. Its offering can be easily installed into most train networks around the world, putting the business in an enviable position to negotiate additional international contracts in future. Also, XTD owns 52 per cent of Contact Light, a disruptive technology enabling communication between digital advertising and mobile devices. Given the strong outdoor advertising space, and XTD’s small, but growing earnings profile, the stock offers an opportunity to growth investors looking to take a little more risk.

 

HOLD RECOMMENDATIONS 

Wellcom Group (WLL) 


Chart: Share price over the year

Offers marketing and production content to clients in Australia, the US and the UK. The company has been growing rapidly by expanding into overseas markets. In particular, the US has outperformed to date. WLL looks fairly priced. We note the strong and growing dividend stream makes it attractive to income seeking investors.

Vita Group (VTG)


Chart: Share price over the year

A licensed Telstra retailer, operating 100 stores, while also expanding its business and enterprise offering. The company has achieved significant growth by optimising its retail network, closing Fone Zone stores and focusing on Telstra outlets. The easy gains have been made, but growth is still expected. 

 

SELL RECOMMENDATIONS 

ALS Limited (ALQ)


Chart: Share price over the year

A strong business with a solid operating history. But the company remains largely exposed to the mining sector through mineral testing operations. But it’s not all bad news. ALQ has partially offset lower mining earnings with strong performances in food and pharmaceutical testing. However, potential coal mine closures may pressure ALQ in the short term.

WorleyParsons (WOR)


Chart: Share price over the year

The engineering services provider to the energy and resources sectors enjoyed a bounce off recent share price lows following a lift in oil prices. However, the continuing need for cost reductions in the energy sector is likely to keep pressure on WOR. Any upside in oil prices could see share price gains. But we believe there are better risk and return trade offs elsewhere.

 

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