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Michael Gable, Fairmont Equities
BUY RECOMMENDATIONS
Automotive Holdings Group (AHG)
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The giant automotive dealer has found strong support and we’re now starting to see a bullish reversal on good volume. Momentum indicators suggest the downward trend from the start of this year is ending and we expect AHG to head higher. There will be some resistance near $4 and again close to $4.20. Full year results in August are likely to be the major catalyst for the stock. The shares were trading at $3.885 on July 7.
ResMed (RMD)
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The medical device maker has been range bound for most of the past year. But in the past several months, it’s been making higher lows. It recently breached resistance near $8.30. If it can hold above the $8.30 region, we should start to see renewed buying interest that’s likely to push the stock higher towards $9.50. The shares were trading at $8.52 on July 7.
HOLD RECOMMENDATIONS
Village Roadshow (VRL)
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The share price took a battering after its half year results in February. After making a false break to the downside a few weeks ago, the shares rebounded strongly and appear ready to move higher leading into full year results in August. We can also see a buy signal triggered on the weekly MACD (moving average convergence divergence). Resistance levels are at $6 and then near $6.65. The shares were trading at $5.36 on July 7.
Origin Energy (ORG)
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An inverse head and shoulders pattern has now formed down at these levels. The neckline near the $5.30 region broke in the past couple of weeks. If we measure the distance between the neckline and extrapolate, we arrive at an upside target of around $7.50. We will turn negative if ORG starts trading back beneath that neckline level. The shares were trading at $5.71 on July 7.
SELL RECOMMENDATIONS
James Hardie Industries PLC (JHX)
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The building materials stock looks vulnerable. Firstly, we saw a bearish engulfing pattern form on the weekly chart. Recently, the stock struggled to overcome the mid point of that bearish candle. A sell signal has been triggered on the relative strength index. For the past five years, JHX has respected the uptrend line, but we expect it to retreat to that level in coming months. This implies downside risk to between $16 and $17. The shares were trading at $20.76 on July 7.
BHP Billiton (BHP)
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In the short term, there’s a risk of it falling back to $15 levels. Since peaking in April, the stock fell sharply for a few weeks. In trying to climb higher, it struggled to make much headway. The stock was sold off heavily on the Brexit result and, if the recent move up struggles again, then BHP may make a final move back below $16. The shares were trading at $19.24 on July 7. 
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Jonathon Howe, Red Leaf Securities
BUY RECOMMENDATIONS
Disruptive Investment Group (DVI)
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Although speculative, this company is improving earnings on a monthly basis via its iBuyNew.com.au investment. The purchase of all the business should be finalised this month. iBuyNew.com.au is effectively a broker for off the plan apartments, with access to more than a $1 billion of stock via numerous developments. The business is on track to sell more than 200 units in fiscal year 2016 and may sell more than 300 in fiscal year 2017. The business is also starting to enter house and land packages, while global expansion is commencing. I own shares in DVI.
Vita Life Sciences (VSC)
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This pharmaceutical and healthcare company had a recent market capitalisation of $73 million and no debt. It has about $10 million in cash and a share buyback is in place. The stock is looking attractive at today’s levels. We also note that Vicky Teoh has a 15 per cent shareholding. Vicky is the wife of David, who is executive chairman of TPG Telecom. I own shares in VSC. HOLD RECOMMENDATIONS
Telstra (TLS)
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The largest of ASX listed telco’s will be reporting in August. Offering a great yield and franking, we’re happy to hold Telstra for the interim period of low interest rates and global uncertainty.   BetaShares Australian Dividend Harvester Fund (HVST)
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Another top yield play in a low interest rate environment. Its primary asset allocation is in ASX financials (67 per cent) and materials (9 per cent). As of July 4, 2016, HVST pays investors about 20 cents a month on a unit cost of $21.25, putting it on about a 10.5 per cent annual yield with franking. SELL RECOMMENDATIONS
Wesfarmers (WES)
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The industrial conglomerate expanded to the UK earlier this year in a deal worth more than $650 million to buy home and garden retailer Homebase. Generally, Australian companies expanding offshore have found it difficult. Think Slater & Gordon. We are advising clients to reduce or completely sell at current levels. ResApp Health (RAP)
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Develops digital healthcare solutions to assist doctors and empower patients to diagnose and manage respiratory disease. The company had an explosive run from 2.5 cents, hitting an all time high recently of 49 cents. Given the inherent risk of trials, it might be time for investors to start banking profits at these levels. The shares were trading at 29 cents on July 6.
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Michael Wayne, KOSEC
BUY RECOMMENDATIONS
Trade Me Group (TME)
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Chart: Share price over the year

One of New Zealand’s most popular websites that offers auction and classified services to members, with a highly engaged audience of 2.8 million. The company’s key advantage is the strong inter linked network of buyers and sellers enabling it to become more valuable as the number of users increases. The financial metrics indicate superior margins than competitors, which is particularly attractive given it was recently trading on a 1 year forward price/earnings ratio of 20.5 times. Seek, REA Group and carsales.com trade on higher forward price/earnings multiples.
Fisher and Paykel Healthcare Corporation (FPH)
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Chart: Share price over the year

Revenues and profits are growing by about 20 per cent, while gross margins continue to improve. The medical device maker offers a bright outlook as it enjoys a dominant share of the respiratory and acute care market that’s still way below capacity. 
HOLD RECOMMENDATIONS
Henderson Group PLC (HGG)
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Chart: Share price over the year

A dual listed company hit hard by Brexit and the falling British pound. Based in the UK, Henderson is one of Europe’s biggest investment managers, servicing institutional, retail and high net worth individuals across a variety of asset classes. HGG has been giving more attention to retail investors in recent years. Retail investors tend to be higher margin clients and more stickier than institutional clients.
Challenger (CGF)
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Chart: Share price over the year

A clear leader in the Australian retail annuity market. It provides investment management and retirement income products to a large and growing consumer base. CGF’s business is well placed to benefit from any government focus on retirement income products. Strong long term annuity demand growth is underpinned by a compulsory superannuation system, which is expected to grow to around $7 trillion by 2030.
SELL RECOMMENDATIONS
Metcash (MTS)
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Competition is fierce in the retail grocery segment. International entrants Aldi and Costco are formidable competitors to the long established supermarket giants. Aldi already has a 10 per cent market share in response to stiff price competition. Newer entrants may pressure the profitability of MTS and existing giants and disrupt the competitive landscape more than you might have previously believed. 
QBE Insurance Group (QBE)
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Chart: Share price over the year

Sovereign bond yields are likely to remain lower for longer in response to Brexit. Today, about 40 per cent of the developed world’s sovereign debt is in negative yield territory as Japan and Europe reduce interest rates to counter deflationary pressures. For insurers, this has led to significantly lower contributions from investment income to overall profitability.

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