Michael Heffernan, PhillipCapital
BUY RECOMMENDATIONS
REA Group (REA)
Chart: Share price over the year
A brilliant survivor from the internet boom era and now has a dominant position in web based property classified ads. It’s been an impressive performer in the past year and offers attractive fundamentals.
Breville Group (BRG)
Chart: Share price over the year
A strong sharemarket performer in the past year. Revenue increased by 5.1 per cent to $605.7 million for the 12 months to June 30, 2017. EBIT rose 7.2 per cent to $79 million. It designs and delivers premium electrical appliances around the globe. It holds a significant presence.
HOLD RECOMMENDATIONS
Tabcorp (TAH)
Chart: Share price over the year
The proposed $11 billion mega merger with Tatts Group is uncertain and has been referred back to the Australian Competition Tribunal for consideration. Ultimately, I believe the merger will proceed in a modified form and generate valuable synergies over time. But, equally, investors should factor in the possibility the merger won’t happen.
AGL Energy (AGL)
Chart: Share price over the year
This vertically integrated energy stock has been another solid performer in the past year. Federal Government intervention has created uncertainty regarding the future of its Liddell coal fired power station in the NSW Hunter Valley beyond its planned closing date in 2022. Investors should watch for opportunities if the share price retreats.
SELL RECOMMENDATIONS
JB Hi-Fi (JBH)
Chart: Share price over the year
The impending arrival of Amazon is already pressuring retailers, including JBH. While JBH has been an outstanding sharemarket performer for many years, the retail sector is generally out of favour with the market.
Cabcharge (CAB)
Chart: Share price over the year
Regulatory changes and increasing competition from Uber leaves CAB facing challenging times. Until the company can sustain long term earnings growth, investors should consider looking elsewhere.
Michael Wayne, Medallion Financial Group
BUY RECOMMENDATIONS
Ramsay Health Care (RHC)
Chart: Share price over the year
The share price of this private hospital operator had dived more than 25 per cent since August 2016. The domestic business continues to progress strongly, although the overseas operations, which generate almost 50 per cent of profits, have recently been weaker. However, weakness in this space may be offset by expansion into the pharmacy sector. The company now has 55 pharmacies (more than the expected 35), enabling the business to capitalise on an ageing population via chronic disease management rather than focusing only on acute treatment.
NextDC (NXT)
Chart: Share price over the year
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The data centre operator’s recent share price decline offers investors an opportunity to take a position, in our view. The company will upgrade capacity and develop market leading energy efficient centres, giving the business a significant competitive advantage. Benefits from substantial investment in fiscal year 2018 should flow through from fiscal year 2019 once scale is achieved.
HOLD RECOMMENDATIONS
Orora (ORA)
Chart: Share price over the year
Heavy investment in recent years is generating stronger cash flow and improving returns. The US operations of this packaging giant generate 35 per cent of group revenue. As a small player in a highly fragmented market, the growth prospects in the US remain attractive, particularly when taking into account improving industry margins.
Platinum Asset Management (PTM)
Chart: Share price over the year
Momentum is starting to build as fund inflows accelerate. The flagship international fund continues to materially outperform its peers, which I believe will attract further fund inflows going forward. Relative to its peers, we feel PTM has superior business momentum and share price upside.
SELL RECOMMENDATIONS
Metcash (MTS)
Chart: Share price over the year
The company’s supermarkets face fierce competition. Aldi already enjoys a 10 per cent market share in response to stiff price competition. Aldi and Costco are formidable competitors and may continue to pressure the profitability of MTS and the existing giants.
Flight Centre (FLT)
Chart: Share price over the year
The business delivered reasonable results and management has outlined several transformational targets that we believe are too ambitious. Business margins slipped in the face of stiff competition, as FLT strives to improve its blended online and physical models.
Simon Herrmann, wise-owl.com
BUY RECOMMENDATIONS
MNF Group (MNF)
Chart: Share price over the year
Following a period of sustained volatility MNF – formerly My Net Fone – has re-gained momentum and continues to outpace the S&P/ASX 200 telecommunications index (ASX:XTJ) and most investment opportunities in the telco space. We remain attracted to the company’s track record, management team and unique position in a saturated market. We continue to rate this stock as a buy and believe MNF remains a suitable investment opportunity for those seeking exposure to the telecommunications space.
Kelly Partners Group Holdings (KPG)
Chart: Share price over the year
One of the stronger floats this year, the company remains well positioned to take advantage of industry dynamics. Kelly Partners is a network of independent operating accounting businesses, servicing small to medium sized enterprises, high net worth individuals and self managed super funds. Management’s ability to successfully pursue a value added growth strategy is the key to long term value creation, while the dividend yield and capital structure are attractive qualities.
HOLD RECOMMENDATIONS
Adacel Technologies (ADA)
Chart: Share price over the year
Challenging conditions in the past 12 months resulted in earnings downgrades and volatile sales, but the strong order book and recent contract wins have helped reinvigorate market confidence. Focused on civil aviation and air defence technology, Adacel’s air traffic control systems are used in North America, Europe, the Middle East and Asia Pacific. There’s early signs that this financial year will be significantly better than fiscal year 2017.
ClearView Wealth (CVW)
Chart: Share price over the year
Offers services in life insurance, wealth management and financial advice. It offers robust earnings growth across the three business segments. We’re attracted to ClearView’s revenue growth trajectory, balance sheet strength and ability to scale up the business. This stock offers potential for capital growth and income.
SELL RECOMMENDATIONS
Carsales.com (CAR)
Chart: Share price over the year
This online classified leader is fundamentally a strong company and we have issued buy recommendations in the past. But economies, sectors and companies tend to go through cycles and we believe it’s a suitable time to capitalise on this investment while the stock was recently trading near an all time high. After a strong run for many years, we believe the balance of risk is no longer favourable, as Carsales is sensitive to increasing competition, weaker consumer sentiment and general economic risks.
CropLogic (CLI)
Chart: Share price over the year
New Zealand based CropLogic sells technology for collecting and analysing data on cropping and plant performance in the agriculture sector. The company has conducted more than 600 trials in the past six years, and we see growth potential after CLI secured its first clients in the US. But we would like to see results from the technology’s commercial potential, as there aren’t many successful precedents in the industry. Good one to watch, but not the right time yet.
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.
