By Simon Herrmann, wise-owl.com
BUY RECOMMENDATIONS
Praemium (PPS)
Record annual inflows of $3 billion have lifted funds under administration above $8 billion, underpinning the company’s growth trajectory. Recently, secured client wins and renewals provide a strong foundation for growing its reporting and administration software. We believe Praemium is well placed to further cement its leading market position.
Sun Resources NL (SUR)
Immediate funding risks weigh on the share price, but the recent recapitalisation, its acquisition of the Bowsprit Oil Project in the US and the appointment of CEO Alex Parks may drive a revival. Results from planned appraisal drilling targeted for the fourth quarter of 2018 are the major share price catalyst. A farm out agreement could also drive interest by reducing the company’s share of capital demands at Bowsprit. The shares finished at less than a cent on July 26.
HOLD RECOMMENDATIONS
Carnarvon Petroleum (CVN)
This Australian oil and gas explorer announced a significant oil discovery at the Dorado-1 well on the North West Shelf, off the coast of Western Australia. The project is a joint venture between Quadrant Energy (80 per cent) and Carnarvon (20 per cent). While further exploration and appraisal is required, Wise-owl believes this discovery could have a transformational impact on the company and warrants a hold recommendation.
Calix (CXL)
Calix offers speculative exposure to demand for alternative raw materials, directly competing with traditional products, such as cement. While Calix generates sales in the sewer and wastewater markets, the company’s vision involves developing a broad range of eco-friendly products for a number of industrial applications. Customer trials are currently underway to validate the commercial appeal of the company’s technology and, as the cost of CO2 emissions increase, legislative pressure could drive demand for CXL’s product portfolio.
SELL RECOMMENDATIONS
Change Financial (CCA)
Previously known as ChimpChange, the share price of this fintech solutions company has tumbled since announcing a significant investment in crypto and blockchain focused ivyKoin. While transaction volumes in its core solutions business have consistently increased quarter-on-quarter, investors have reacted cautiously towards its investment in the higher risk crypto environment. Our advice is to avoid for now.
Nufarm (NUF)
This crop protection product company recently downgraded earnings guidance and provided a subdued outlook for fiscal year 2019 as an over-supply coupled with persistently low demand creates a challenging environment. The company blames an unusually dry autumn for low demand in its crop protection business.
Michael Kodari, KOSEC
BUY RECOMMENDATIONS
Aristocrat Leisure (ALL)
This gaming machine company has enjoyed a strong 24 months and is proving to be a serial wealth winner for investors. The company’s gaming machines hold significant market share in Australia, but US dollar revenue has been particularly prominent in driving earnings growth over the period. Acquisitions in the social gaming space amid a positive tax environment in the US paint a bright growth outlook.
CSL (CSL)
The healthcare industry has grown on the back of ageing baby boomers and government incentives to ensure the quality of service is internationally recognised. CSL has been a beneficiary, as it specialises in biopharmaceutical services. CSL has a strong pipeline of new products in development, and success of the emerging influenza acquisitions are becoming noticed in the market. It offers solid financials and impressive management structures.
HOLD RECOMMENDATIONS
BlueScope Steel (BSL)
BSL has just secured the largest solar power purchasing deal in Australia, forecast to accommodate 20 per cent of the company’s electricity costs. Drawing power from a 500 panel solar farm, forecast to be completed by mid 2019, will potentially increase competiveness, offsetting possible downside associated with market uncertainty in the international economy. Given this, we perceive the stock has further upside, particularly ahead of reporting season.
Whitehaven Coal (WHC)
Produces what is considered high quality coal that’s much cleaner than what many of its competitors produce. Given China’s Blue Sky policy, demand for cleaner coal is increasing. WHC should benefit if Chinese economic growth remains strong this year, making it a logical hold.
SELL RECOMMENDATIONS
Domino’s Pizza Enterprises (DMP)
The likes of Foodora, Uber Eats, Deliveroo, Menulog and others have put Domino’s under pressure. The pizza giant faces stiff competition going forward, and the shares have fallen from $52.95 on July 3 to close at $48.86 on July 25. We believe the price trend is down.
Speedcast International (SDA)
This provider of satellite communication services to the public and private sectors has enjoyed a great price run in the past year. The shares were priced at $3.31 on August 30, 2017. The stock closed at $6.06 on July 25 this year. In our view, the stock may meet resistance at these levels, as it’s trading significantly above market price/earnings ratios.
Gavin Wendt, MineLife
BUY RECOMMENDATIONS
Thundelarra (THX)
Despite a string of positive drilling releases related to its Garden Gully gold project in Western Australia, the company is yet to generate significant market recognition in terms of share price performance. This can be partly explained by end of financial year (EOFY) tax loss selling and a weaker gold price due to US dollar strength. Nevertheless, this presents a potential buying opportunity with respect to Thundelarra, as the latest Garden Gully drilling has raised the prospect that historically mined lodes at Crown Prince could repeat at shallower depths in the oxide zone to the north-east in an area not previously explored.
Sayona Mining (SYA)
A stock that’s recovered from EOFY tax loss selling, Sayona continues to solidly progress its Authier lithium project in Canada. Pre-feasibility study (PFS) results in late 2017 highlighted the project’s value – including a 17-year project life and internal rate of return of 56 per cent. The PFS also confirmed the technical and financial viability of constructing a simple, low strip ratio, open cut mining operation and low capital expenditure processing facility to produce spodumene concentrate. The market is now keenly anticipating the release of the Authier definitive feasibility study over the coming weeks.
HOLD FRECOMMENDATIONS
Sunstone Metals (STM)
Market interest has grown on the back of the company’s highly encouraging trenching results at its Bramaderos gold-copper project in Ecuador. The nation is currently one of the world’s exploration hotspots, with BHP Billiton and Newcrest Mining recently entering into deals. The next key milestone for Sunstone would be drilling approvals, which the market is keenly awaiting.
St George Mining (SGQ)
St George set the market alight during late 2017 on the back of exciting, high grade drilling results at its Mt Alexander project in Western Australia. It intersected nickel-copper-cobalt sulphides at a shallow depth. The near surface nature of the mineralisation enhances the commerciality of any prospective mining operation. The latest drilling program at Mt Alexander has commenced, with the potential to confirm significant depth extensions to the existing mineralisation.
SELL RECOMMENDATIONS
PolarX (PXX)
The share price of this mineral developer and explorer suffered from EOFY tax loss selling, hitting a low of 8 cents. This is despite the company recently starting follow-up drilling in Alaska, with solid results filtering through. Significantly, the company’s share price has begun to recover and closed at 13 cents on July 25. Investors might wish to lock in some short term gains on their holdings, while retaining the balance as the company gets ready to report assay results on visible copper and gold mineralisation encountered in the latest drilling.
Pilbara Minerals (PLS)
The company has been a star performer, with the key to its success being its first mover status in the burgeoning lithium sector. It acquired a first class acreage position at a time when lithium wasn’t a mainstream investment story. Since then, PLS has implemented a meticulous program of exploration and appraisal activity, which has highlighted the scope of its spodumene-lithium resource base in Western Australia. Given its strong price performance and a recent softening in Chinese lithium pricing, investors might look to lock in some profits at these levels. The shares closed at 96.5 cents on July 25.
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.
