Matthew Felsman, APP Securities
Vocus Communications (VOC)
The stock has been savaged in recent weeks from above $8.50 to close at $5.94 on October 19. Senior management tensions seem to have emerged following the earlier Vocus and M2 Group merger. But fiscal year 2016 results reported in August were positive and recent boardroom tension shouldn’t be earnings related in our view. Betashares S&P/ASX 200 Financials Sector ETF (QFN)
Future earnings support from local and global central banks moving to a neutral or tightening bias and softer share prices rather than earnings weakness are all upside risks for financials. We believe the banks will attract defensive money away from companies trading on extended valuations sensitive to higher interest rates. HOLD RECOMMENDATIONS
Emefcy Group (EMC)
We recommended this wastewater recycler as a buy to thebull readers when it was trading at 83 cents in September. The stock hit a year high of $1.18 on October 10 before closing at 99 cents on October 19. We believe this stock is just getting started after recently announcing a strategic Chinese partnership.
QBE Insurance Group (QBE)
QBE’s profitability will improve if forecast increases in US interest rates and a weakening Australian dollar materialise. Surprises could easily be to the upside. The macro circumstances that previously presented major headwinds for the company are now changing. In our view, the stock has bottomed and we’re now targeting $12. The stock closed at $10.19 on October 19. SELL RECOMMENDATIONS
Sydney Airport (SYD)
We are selling interest rate sensitive infrastructure stocks like Sydney Airport. The stock closed at $6.53 on October 19. Its 12 month high was $7.62 on August 1, 2016. In the short term, we believe a test below $6.40 looks likely. In our view, stocks bid up in recent years as yield plays are likely to unwind as market dynamics change. Transurban Group (TCL)
The company recently updated the market with decent revenue figures and good traffic numbers. Even if TCL bounces short term, we still see expensive and defensive yield stocks coming under pressure when interest rates rise.
Darren Jackson, Sanlam Private Wealth
BUY RECOMMENDATIONS New Hope Corporation (NHC)
There’s been a big recovery in energy prices this calendar year, with thermal coal up about 40 per cent and natural gas up by about 26 per cent. The company has a strong balance sheet and we believe it offers considerable relative value to the more liquid Whitehaven Coal. Pacific American Coal (PAK)
A key theme is India’s exceptionally strong economic growth and the strategic importance of coking coal to India’s steel production process. PAK has high quality coking coal deposits in Canada and hasn’t experienced the same uplift from rising coking coal prices compared to other ASX listed coking coal stocks.
HOLD RECOMMENDATIONS Veriluma (VRI)
Veriluma is a recent backdoor listing and we participated in the capital raising. The company is commercialising Australian Department of Defence technology that provides predictive analysis. We’re very bullish on big data and machine learning exposed companies. Propertylink Group (PLG)
A recent IPO that owns and manages commercial and industrial properties in Australia. The stock is trading below the IPO price, while offering a strong dividend yield and free cash flow generation. There’s no reason why it can’t meet prospectus forecasts. SELL RECOMMENDATIONS Absolute Equity Performance Fund (AEG)
An astutely managed investment portfolio of Australian listed securities. On our numbers, the stock is trading at a premium to net tangible assets. We believe better investment opportunities exist elsewhere.
Duxton Water (D20)
A recently listed company that invests in Australian water entitlements and, in turn, leases them out to primary producers. Given good rains, operating conditions are far from ideal for D20.
Gavin Wendt, MineLife
Poseidon Nickel (POS)
One of our preferred emerging nickel plays. After several years focusing solely on re-commissioning its historic Windarra nickel project in Western Australia, a series of important acquisitions from Norilsk in Russia have provided new and diversified production sources. At the same time, it has an evolving WA lithium project portfolio and aims to become a stand alone producer in the Lake Johnston region by utilising its existing nickel processing infrastructure to toll treat lithium ore on a third party basis.
Antipa Minerals (AZY)
This explorer maintains a first class acreage position within the mineral rich Telfer province of Western Australia – as reflected in signing an agreement with mining behemoth Rio Tinto Exploration. It allows Rio to spend up to $60 million on exploring and appraising Antipa’s Citadel gold and copper project within the Telfer region. The company’s phase 2 Citadel exploration program has just started, which will include up to 6000 metres of RC (reverse circulation) drilling and completing between 30 to 40 RC drill holes.
Incremental Oil and Gas (IOG)
IOG has generated solid investor interest as a result of steady appraisal progress and efficiency drives on its key US oil fields. It’s just embarked on a major 24 hole, work over program to boost gas production at its flagship Silvertip field in Wyoming, with encouraging initial results at a time of rising US gas prices.
Orion Gold (ORN)
It boasts significant acreage within the Connors Arc project, north west of Rockhampton. It’s also recently acquired an option over advanced and potentially company making gold and base metals projects in South Africa. Maiden exploration programs are underway in South Africa on its Prieska zinc-copper project, Marydale gold project and Kantienpan zinc-copper deposit. Immediate success on all three project fronts has coincided with a sizeable recovery in Orion’s share price.
Minotaur Exploration (MEP)
The share price has enjoyed a strong rise in the second half of 2016, just as a lot of early high flyers in the junior resource space started to struggle. The company has been busy exploring on two fronts recently – in Queensland and South Australia – in conjunction with farm-in partner OZ Minerals. We’re excited about the potential of both projects, but given strong recent share price gains, investors might look to lock in some profits.
Cardinal Resources (CDV)
The company has invested considerable amounts of time and money in de-risking its Namdini gold project in Ghana to an acceptable level, with an initial JORC resource estimate expected during 2016 fourth quarter. The company’s strongly performing share price reflects growing market confidence. Nevertheless, investors might want to take some profits around current price levels.
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.