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Matthew Felsman, APP Securities

 

BUY RECOMMENDATIONS

 

Commonwealth Bank of Australia (CBA) 

Chart: Share price over the year

The major banks were punished in May in response to the Federal Government announcing a bank tax in the May budget. ANZ, NAB and Westpac also traded ex-dividend. In our view, CBA offers top value around $80, as downside momentum starts to slow. The shares closed at $79.62 on June 1.

 

Fortescue Metals Group (FMG)

Chart: Share price over the year

Significantly correcting from its highs in February 2017, we are bullish on the large cap resources space. Long term emerging markets remain strong, and we believe this iron ore producer offers good value around $4.60 levels. The shares closed at $4.67 on June 1.

 

HOLD RECOMMENDATIONS

 

Aristocrat Leisure (ALL)

Chart: Share price over the year

A recent high quality result should keep this gaming stock supported in 2017. Continue holding, as full year guidance suggests there may be further upgrades to come.  

 

BT Investment Management (BTT) 

Chart: Share price over the year

A combination of the stock trading ex-dividend and Westpac culling a near 20 per cent stake at a significant discount has pushed the stock lower. BT is a global business and we continue to favour financials with exposure to Europe, so investors should consider holding.

 

SELL RECOMMENDATIONS

 

Sydney Airport (SYD) 

Chart: Share price over the year

As global interest rates rise, yield play stocks should lose favour. After initially correcting on this theme, SYD has moved back towards all time highs. The shares finished at $7.53 on June 1. It may be a good time to take a profit. 

 

Harvey Norman (HVN) 

Chart: Share price over the year

Just like the in-store financing, we have no interest in this stock or sector. Investment analysts are downgrading the longer term earnings forecasts of electronic retailers as Amazon plans to aggressively compete in the Australian market. Shoppers are more careful about what they buy given increasing household charges in the absence of meaningful wage growth.  

 


Simon Herrmann, wise-owl.com

 

BUY RECOMMENDATIONS

 

Monadelphous Group (MND)

Chart: Share price over the year

This engineering services company has a strong order book and has been awarded an additional $700 million of new contracts during the first half of fiscal year 2017. The company is looking to expand its services into new markets. The company is forecast to pay a full year distribution, yielding about 4.5 per cent. We believe this stock is a suitable addition for investors looking for capital growth and income.

 

Trade Me Group (TME)

Chart: Share price over the year

Trade Me offers profitable exposure to online retail trends in New Zealand. We’re attracted to the company’s growth trajectory, dominant market position and history of dividend growth. In the past four financial years, revenue grew at a compound annual growth rate of 10 per cent and we expect the trend to continue. Trade Me offers a compelling mix of capital growth and income.

 

HOLD RECOMMENDATIONS

 

Collaborate Corporation (CL8)

Chart: Share price over the year

Owns and operates DriveMyCar, one of Australia’s largest peer-to-peer car rental platforms. CL8 is among the best performing tech stocks in 2017. CL8’s funding position has significantly improved following the exercise of its April 2017 options tranche and a $1 million strategic investment from the Royal Automobile Club of Victoria (RACV). The RACV investment validates management’s strategy and provides a new channel partner to leverage CL8’s intellectual property into a new market.

 

Crowd Mobile (CM8)

Chart: Share price over the year

After acquiring mobile payments provider Track Holdings in October 2015, Crowd Mobile has faced operational and fiscal challenges, resulting in a falling share price. However, Crowd’s question and answer platform has grown strongly and the company’s capital structure has significantly improved. Crowd Mobile is showing early signs of a turnaround, which deserves attention.

 

SELL RECOMMENDATIONS

 

FlexiGroup (FXL)

Chart: Share price over the year

In our view, this diversified financial services group operates in a highly regulated industry, and is consistently exposed to regulatory risks. We believe there are better and safer opportunities elsewhere.

 

Medusa Mining (MML)

Chart: Share price over the year

The company’s share price has fallen from a year high of 80.5 cents to close at 30 cents on June 1. On May 5, the company downgraded full year production guidance at the Co-O Gold Mine in the Philippines. The grade isn’t sufficient to meet production guidance. 

 


Michael Wayne, KOSEC

 

BUY RECOMMENDATIONS

 

Chorus (CNU)

Chart: Share price over the year

CNU has been responsible for rolling out the New Zealand Government’s broadband program, where telecommunication retailers rent access to the network for their customers. The scheme is looking to connect 75 per cent of the NZ population by 2020. Chorus built most of the network and has invested more than $1.7 billion on fibre capability as part of the rollout. Long term returns and the value of Chorus will be determined by demand for fibre services. There’s a clear trend of growing data usage as browsers trade up to higher data plans. 

 

Henderson Group PLC (HGGDA)

Chart: Share price over the year

Henderson is one of Europe’s largest investment managers, servicing institutional, retail and high net worth investors across a variety of asset classes. Relative to peers, Henderson trades on far less challenging multiples and a superior dividend yield. The business has been under pressure since the Brexit vote, but signs are beginning to emerge that retail fund outflows are slowing and the momentum has shifted.

 

HOLD RECOMMENDATIONS

 

Fisher & Paykel Healthcare Corporation (FPH)
 
Chart: Share price over the year

Holds a competitive advantage and dominant position in respiratory and acute care. The most recent fiscal year 2017 result was strong, with net profit after tax increasing 18 per cent to NZ$169.2 million. It generates strong recurring revenue from high margin consumables. A combination of falling manufacturing costs and strong demand for products has helped increase gross margins from 57.3 per cent to 66 per cent in just three years. 

 

Trade Me Group (TME)

Chart: Share price over the year

New Zealand’s leading online auction and sales platform has developed a highly engaged audience and strong brand equity, courtesy of its intuitive interface, security features and ease of payments. TME has topped the Ipsos list as New Zealand’s most influential company. There are signs of solid earnings growth in company reports. 

 

SELL RECOMMENDATIONS 

 

AGL Energy (AGL)

Chart: Share price over the year

AGL has been performing well in recent months, but the challenge is sustaining the rally. AGL is a reliable income producer with a gradual growth profile. But, in my view, the business is trading on elevated price/earnings multiples for a company with limited growth opportunities and regulated price increases. 

 

Mineral Resources (MIN)

Chart: Share price over the year

MIN is likely to come under more pressure if there’s further weakness in iron ore markets. In the absence of distinguishing between recurring revenue from iron ore crushing and non-recurring revenue from mining services activities, the share price tends to be more volatile to moves in the underlying iron ore price.  

 

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