Simon, Herrmann, wise-owl.com
Beach Energy (BPT)
Focusing on oil and gas production in the Cooper/Eromanga Basins, Beach Energy has outperformed the broader market and we see potential for further upside as favourable industry trends support the company’s cash flow generation capabilities amid record production.
Regis Resources (RRL)
The company’s primary asset is the Duketon Project, located near Laverton in Western Australia, which is projected to produce between 335,000 and 365,000 ounces of gold in fiscal year 2018. We believe Regis has a compelling value proposition and is well positioned to direct free cash flow towards ongoing growth initiatives.
Freehill Mining (FHS)
This Chile focused iron ore miner has made substantial progress at fine tuning its trial operations at Yerbas Buenas, resulting in increasing revenues, improving cash margins and higher iron ore grades. A leaner capital structure and stronger management team could help drive further improvements over coming months. As the company accelerates the progression of a feasibility study, we continue to monitor its turnaround potential.
Alice Queen (AQX)
This gold company is focused on exploration at its Horn Island and Mendooran projects. Drilling is underway at both projects and a resource upgrade is possible at Horn Island this quarter. Newcrest Mining is expected to drill high priority targets at Mendooran this quarter. While the company’s risk profile remains elevated, we believe there’s speculative upside from its exploration activities.
Peninsula Energy (PEN)
This uranium company has experienced a significant share price decline in the past four months, as a result of a persistently low prices and negative sentiment towards the uranium sector. Despite a ramp up in quarter on quarter production at its Lance Project in the US state of Wyoming, we believe there’s better opportunities elsewhere.
Mint Payments (MNW)
We retain our sell recommendation as this payment processing solutions company continues to rely on external capital. The company is experiencing growth across most key metrics, but we continue to wait for evidence of sustained earnings momentum. The shares closed at 3.4 cents on April 26.
Ishan Dan, Wattle Partners
Three new data centres will be added to the existing portfolio to meet increasing demand for cloud computing storage. This puts NXT in a prime position to capitalise from this growing need and paints a brighter long term outlook for this big and growing data centre operator.
This building products company is selling surplus land at Horsley Park in NSW. The sale is expected to generate property earnings before interest and tax of about $30 million. CSR can take advantage of strong demand for industrial properties while still operating on the site. The company has also been riding the aluminium price wave. CSR owns 36 per cent of the Tomago aluminium smelter. We’re confident Australia’s housing construction growth and aluminium prices will remain strong.
QBE Insurance Group (QBE)
The company’s share price has been punished following a string of disastrous profit downgrades. A new CEO plus a senior management shake up could work. While a turnaround is some way off, what we do see working in the company’s favour is rising global bond yields. QBE benefits from rising rates due to its US operations and investments in interest rate sensitive assets. QBE is a hold.
BHP Billiton (BHP)
In a recent update, the mining giant trimmed iron ore forecasts due to car dumper reliability issues. More importantly, selling US shale assets is good news for investors given higher oil prices. BHP could yield a good price and there seems to be significant interest from small and big players.
In our view, there’s no reason to be in this embattled wealth manager following the reputational damage suffered at the banking royal commission. The shares were priced at $5.43 on March 9. The shares closed at $4.05 on April 26. Just too many issues and challenges on so many fronts lay ahead.
Blue Sky Alternative Investments (BLA)
Michael Wayne, Medallion Financial Group
Technology One (TNE)
Australia’s largest provider and consultant of enterprise software. TNE has delivered many consecutive years of record revenues, licences and profit, which has been driven by its cloud and mobile first strategy. The transition into cloud product is gaining momentum as more customers move away from customised software.
Speedcast International (SDA)
SDA buys satellite capacity from operators and then resells the satellite usage and telecommunication services to more than 100 different customers primarily operating in remote locations, such as ships and offshore oil rigs. The company continues to reduce debt and is winning new global contracts in a growth industry.
Credit Corp Group (CCP)
CCP is a quality business and Australia’s largest receivables management group. The business exerts high asset turnover and a low cost to collection ratio that’s enabled the company to increase earnings and dividends each year for the past 10 consecutive years. For a business with an earnings per share compound annual growth rate of 28 per cent, a price/earnings ratio below 20 seems cheap.
Fisher & Paykel Healthcare Corporation (FPH)
FPH has a dominant global position in the respiratory and acute care market. Margin expansion of this high quality business has been underpinned by increasing production in Mexico, which now accounts for 35 per cent of the company’s total manufacturing output.
Coca-Cola Amatil (CCL)
The stock has been trending up since November 2017 to close at $9.24 on April 26. However, we feel the structural trend of consumers moving away from fizzy drinks will remain a headwind for some time. In our view, competitor pricing pressure and intense competition across the grocery industry have the potential to further compress margins.
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