Matthew Felsman, APP Securities
BUY RECOMMENDATIONS Westfield Corporation (WFD)
Caught up in a massive yield play sell off in the REIT sector, the share price is well below intrinsic value. Volume and momentum have returned to the stock after recent broker upgrades. We’re positive about the US dollar and like Westfield as it generates 75 per cent earnings in US dollars. TPG Telecom (TPM)
It recorded a 52 week high of $12.93 on July 29. The shares were trading at $7.25 on November 24. The market wanted more than 2017 earnings growth guidance of 7 per cent. Fundamentally, there’s nothing wrong with the company. It offers quality management and major shareholders are some of the most successful investors and businessmen in Australia. At recent levels, the stock is a bargain buy.
HOLD RECOMMENDATIONS Healthscope (HSO)
Approaching Christmas is historically the best time of the year for healthcare stocks, with the sector averaging a return of more than 4.5 per cent in November and December. Recently, in response to an average operational update, investors sold first and asked questions later. We bought when the stock was down more than 20 per cent. Lower than expected growth for three months in a year isn’t the end of the world. Hold. CSL (CSL)
We bought this blood products company for clients on US election day for around $97 as the market plunged almost 4 per cent on the prospects of a Donald Trump win. Historically, CSL usually adds around $10 or 10 per cent in November, December and January when the healthcare sector traditionally rallies. One of Australia’s highest quality businesses. SELL RECOMMENDATIONS Whitehaven Coal (WHC)
Coal and related company share prices are euphoric at these levels. WHC recorded a 52 week low of 35.5 cents on February 11. The stock was trading at $2.78 on November 24. A director recently sold shares. After huge gains, take some profits. Betashares S&P/ASX 200 Financials Sector ETF (QFN)
I recommended QFN as a buy to The Bull readers on October 24. The ETF has rallied and we suggest taking profits. We suggest investors consider buying stocks that generate earnings in US dollars.
Michael Gable, Fairmont Equities
Premier Investments (PMV)
We can see this investment vehicle, with a focus on retail, bouncing off the uptrend line with a lot of volume washed out at the low. There’s also an obvious correction against the spike up earlier this year. This price action is very bullish for the longer term and it now appears a good time to re-enter PMV.
This supply chain logistics company peaked in July this year and then formed a reversal on the weekly chart. The pullback into the November low was done in five waves. That now appears to be finished. We should now at least see a three wave advance to higher levels, possibly to retest the recent high near $13.50. The shares were trading at $12.19 on November 23.
Fisher and Paykel Healthcare Corporation (FPH)
Despite the volatility of the past few weeks, we can see FPH bouncing off these lower $8 levels and remaining within the longer term uptrend. We can also see a bullish reversal on the chart. We’re confident FPH is likely to rise again to at least mid $9 levels. At that point, we’ll assess the chart. The shares were trading at $7.74 on November 23.
IPH Limited (IPH)
IPH is the holding company for intellectual property and associated companies. There’s some support near $5 and IPH managed to bounce off that. We can see some more buying in IPH, as it seems very cheap at current levels. In terms of upside, we can see resistance between $7 and $7.50. The shares were trading at $5.30 on November 23.
We previously warned about a threat from a resurgent Woolworths and increased competition. With the chart showing WES was unable to sustain a rally in good times, it was sold off heavily several weeks ago. There’s a little support at recent levels, providing an opportunity to sell into a short term bounce. Once support breaks here, we’re looking at WES hitting our previously mentioned downside target of $34. The shares were trading at $41.41 on November 23.
DLX looked bullish several weeks ago as it once again retested resistance near $6.80. The ascending triangle was just waiting to break to the upside, but it went the other way. Now we can see DLX falling to low $5 levels before it gains any sort of support. The shares were trading at $5.875 on November 23.
Jeremy Hook, TMS Capital
BUY RECOMMENDATIONS REA Group (REA)
The recent result was strong despite lower levels of listings in response to the property market run entering a mature phase. A listings decline is seasonal and cyclical and we expect listings to resume longer term growth patterns in the New Year. The move into Asia and the US offers strong long term potential and we continue to recommend what we regard as Australia’s premier growth stock.
The shares have retreated from a 52 week high of $16.65 on May 27 to trade at $14.38 on November 23. But we continue to like this global packaging giant as it’s been a strong performer in recent years and we expect further growth in future. Trading on undemanding multiples, it should continue to rise towards $17. HOLD RECOMMENDATIONS Magellan Financial Group (MFG)
Generating a return on equity of about 60 per cent, it’s the best of a good group of fund management companies. Behind our recommendation is a strong track record of performance over many years and we believe the stock is fairly valued for now. Baby Bunting (BBN)
It’s the leading player in the baby products segment and has a growing online presence. Guidance at its recent AGM confirmed our stance – that we’re happy holding this good performer and would look to add more if price weakness emerges.
SELL RECOMMENDATIONS South32 (S32)
Recent improvement in materials stocks on the back of rising commodity prices has resulted in upgrades to the outlook for this metals and mining company. However, we believe it represents less value and growth than BHP Billiton and recommend switching to BHP or Rio Tinto. AMP (AMP)
Simply, a chronic underperformer. It continues to represent less value than alternative stocks in the diversified financials sector. Its return on equity is lower than other listed fund managers by some margin. Move on, as there’s better value elsewhere.
>> BACK TO THE NEWSLETTER: Click here to read other articles from this week’s newsletter
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.