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Jeremy Hook, TMS Capital 

BUY RECOMMENDATIONS

Isentia (ISD) 

Chart: Share price over the year

ISD is a leading media content company. Having acquired King Content in 2015, ISD has added geographic and business diversity to its existing Media Monitors business. A quality growth company with an excellent business model.

REA Group (REA)

Chart: Share price over the year

Remains one of Australia’s premier growth stocks, and confirmed as much in its February result. We like the high return on equity (about 50 per cent) and its ability to generate returns through the cycle. The recent acquisition of iProperty should lead to long term growth in Asia.

 

HOLD RECOMMENDATIONS

Magellan Financial Group (MFG) 

Chart: Share price over the year

An outstanding performer over many years, and the consequent move in price above $20 levels leaves it fairly valued. Generating a return on equity of about 60 per cent, it’s the best of a good group of fund management companies. The shares were trading at $22.69 on April 20.

Ramsay Health Care (RHC) 

Chart: Share price over the year

A leading private hospital operator, but it’s now priced on 27 times fiscal year 2016 earnings. We expect upward momentum to slow, so we have moved from a buy recommendation to a hold.

 

SELL RECOMMENDATIONS

CYBG PLC  (CYB) 

Chart: Share price over the year

Investors in NAB would have received their entitlements to CYB as part of NAB’s long awaited demerger of the Clydesdale and Yorkshire bank brands. We believe investors are better off selling small parcels of shares given the dividend will be unfranked. In our view, CYB has a questionable growth path.

Medibank Private (MPL) 

Chart: Share price over the year

The company has performed exceptionally well since listing in November 2014. But we believe MPL is overvalued at 22 times fiscal year 2016 earnings. It’s time to bank the profit and look elsewhere.


Warwick Grigor, Far East Capital

BUY RECOMMENDATIONS

First Graphite (FGR)

Chart: Share price over the year

Announcing it can convert its high grade graphite vein into graphene at the rate of 80 per cent in less than 24 hours places it at the forefront of low cost bulk graphene production. The same low cost process can be used to make the highest grade graphite product of 99.9 per cent. It all comes down to the best profit margin with low capital and operating costs. First production should be available to the market in the 2016 third quarter.

Santana Minerals (SMI)

Chart: Share price over the year

Silver stocks are hard to come by on the ASX, and few people have silver experience. However, chairman Norm Seckold has had plenty of experience with silver plays in Mexico. He’s back in the business with SMI. Funds have been raised for a new drilling program so news flow is improving. Silver may be a relatively better performer than gold in the near future. 

HOLD RECOMMENDATIONS

Pacific American Coal (PAK)

Chart: Share price over the year

Coal stocks are out of favour, so PAK is looking beyond this depressed commodity. It will seek shareholder approval to buy into the graphene commercialisation business. An investment in Imagine Intelligent Materials will place it at the start of the business end of a promising new graphene industry, benefiting from licences and royalties as industry moves into this space. 

Lucapa Diamond Company (LOM)

Chart: Share price over the year

It’s been a wild ride for shareholders while LOM’s been advancing its Angolan alluvial diamond mine. LOM sold its 404 carat diamond for $A22 million. The shares have drifted as the spectre of $18 million worth of options expiring in April has dominated the stock price. Once this passes, the share price should start to perform more on operational merits. The wet season is ending and production capacity will double over the next few months as the E46 project area is brought on stream. Watch out for drilling of the L259 structure that’s waiting a final sign off as a confirmed hard rock kimberlite discovery.  

SELL RECOMMENDATIONS

Magnis Resources (MNS)

Chart: Share price over the year

A high profile graphite stock that’s done well for shareholders, particularly on news that its graphite can be used for spherical graphite. But it won’t be easy raising the $350 million needed to develop a 5 million tonne a year mine. The easy money has already been made in the market. The hard work of raising the money, construction and commissioning now takes over. Bear in mind, the proposed 240,000 tonnes per annum of graphite concentrate production would boost world supply of natural graphite by more than 20 per cent. Oversupply looms. Take profits and look for the next performer.

Talga Resources (TLG)

Chart: Share price over the year

In early 2014, when TLG announced it could make the cheapest graphene in the world using the electrochemical exfoliation process, the world was its oyster. However, progress in the pilot plant has been slow and the recent emphasis on graphite, rather than graphene, has some shareholders worried. In my view, First Graphite (FGR) has a much better graphite ore type – far more efficient for making graphene – and it’s the highest grade in the world. 

Warwick Grigor declares he has interests in all the above shares except Magnis Resources.


Simon Herrmann, wise-owl.com

 

BUY RECOMMENDATIONS 

Medusa Mining (MML)

Chart: Share price over the year

After operating profitably amid a four year contraction in gold prices, Medusa is poised to deliver improving earnings on the back of recent gold price strength. The company is on target to produce between 120,000 and 130,000 ounces of gold at its Co-O mine at all in sustaining costs of between $US900 and $US1000 an ounce. The company has a strong balance sheet with cash and cash equivalents totalling $US13.6 million and no debt. 

Real Energy Corporation (RLE)

Chart: Share price over the year

RLE’s assets include four petroleum exploration permits covering a total area of 9523 square kilometres in Queensland’s south west. Expect upcoming appraisals to determine the commercial value of its Cooper-Eromanga project. We favour the balance of risk and our valuation of 52 cents represents a significant premium to its share price of 10.5 cents on April 21. The valuation is based on our discounted cash flow projection for the entire project life. A speculative buy. 

HOLD RECOMMENDATIONS

The Star Entertainment Group (SGR) 

Chart: Share price over the year

Owns and operates hotels and casinos in Sydney, Brisbane and on the Gold Coast. Our recommendation is based on the company’s strong operational performance and fully franked dividend yield of about 2 per cent. The stock has defied sharemarket weakness and continues to make new highs. 

Teranga Gold Corporation (TGZ)

Chart: Share price over the year

Focusing on gold mining in Africa, Teranga has a strong balance sheet, surplus cash and no debt. Competitive all in sustaining costs coupled with production guidance of more than 200,000 ounces of gold in fiscal year 2016 make for an attractive investment case. Our price target is $1.10. The stock was priced at 89 cents on April 21.  

SELL RECOMMENDATIONS

Platinum Asset Management (PTM)

Chart: Share price over the year

Offers diversified exposure to international equities, with substantial interest in US equities. However, this fund manager has underperformed the broader market since January. The weekly chart shows a technical break to the downside, which could result in heavy selling if sentiment turns negative. 

Rewardle Holdings (RXH) 

Chart: Share price over the year

The share price of this software company continues to fall. On December 30, 2015, the shares were priced at 17.5 cents. On April 21, 2016, the stock was trading at 8.1 cents. The company reported a loss of $3.5 million for the six months to December 31, 2015. Limited entry barriers leave the company exposed to competitive risks while developing market share. The company relies on external capital and there’s no guarantee its subscription based revenue model will achieve scalable penetration rates.

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