Julia Lee, Bell Direct
Jittery investors dumped this online retailer on news company founders were selling shares. The share price has fallen substantially in the last quarter to trade at $6.46 on August 16. In our view, the share price sell-off looks like an over-reaction to the downside. Kogan will benefit from the structural shift from bricks to clicks.
ALS Limited (ALQ)
Commodities and life sciences generate the bulk of earnings for this analytical laboratory services company. After seven years of declining margins in the life sciences division, it now appears to be turning around. Also, the metals and minerals division is cyclical and linked to the commodities cycle, which is still strong. Resource companies are highly cashed up, so the lack of relative development and exploration at this stage of the cycle leaves room for additional growth in this unit.
Domino’s Pizza Enterprises (DMP)
The company’s latest result disappointed the market. However, net store openings are set to double this financial year to between 225 and 250, which should underpin growth. With the share price about 40 per cent below its 2016 peak, this looks like a volatile but interesting hold.
The A2 Milk Company (A2M)
There’s a lack of catalysts here and the share price is likely to track sideways, in our view. With strong growth still flowing, although well flagged, A2M is a hold around $10. The company is still early along the path to becoming a global dairy company, so we should see growth for a long time. The shares were trading at $9.88 on August 16.
ORE is a global lithium carbonate supplier. The battery theme was an easy one to play in 2017. This year, prices have been falling. Cobalt prices are down 30 per cent since mid March and the lithium carbonate price in China has fallen about 40 per cent over the same time. The underlying lithium carbonate price is unlikely to recover soon. So, in our view, there aren’t enough reasons to be in the battery space at the moment.
JB Hi-Fi (JBH)
Although the consumer electronics giant recently reported earnings ahead of guidance, there appears to be a few too many risks ahead. The Good Guys retail chain remains susceptible to a housing downturn and Amazon is still in the early stages of ramping up in Australia. The company faces the challenge of stiffer competition from online retailers going forward.
Jonathon Howe, Red Leaf Securities
Eve Investments (EVE)
EVE has entered a binding share purchase deed to acquire 100 per cent of Jenbrook, an organic tea tree oil producer. Jenbrook reported revenue of $2.1 million from its tea tree products in financial year 2017, with a further unaudited contribution of $US1.5 million from its subsidiary Naturally Australian Products. EVE also holds a substantial investment in Meluka Health, which is focused on producing medicinal honey. We believe this company appeals for its growth potential. I own shares in EVE. The shares were trading at less than a cent on August 15.
Transaction Solutions International (TSN)
Owns 100 per cent of Decipher Works (DWX), a cyber security services business with tier 1 financial institutions and airports as clients. The company is on track to deliver net profit after tax of $1 million. TSN also has a stake in TSI India, a private financial services company that owns and operates ATMs and bill payment kiosks in India. Several catalysts for a re-rating include a revenue increase from DWX, bolt-on acquisitions and a potential divestment of TSI India. The shares were trading at less than a cent on August 15. I own shares in TSN.
This telecommunications giant has been a serial underperformer for a large market capitalisation stock. Trading at $2.89 on August 15, the attractive grossed up dividend yield was around 10 per cent. NBN legacy issues will be forgotten once the 5G rollout occurs, which, in our view, will be a catalyst for a re-rating. Commonwealth Bank (CBA)
The CBA is in the process of ridding itself of its wealth management business. We believe this is a positive move, as it will enable the CBA to focus more on its core business. The stock has bounced off its June 14 low of $67.22 to close at $73.99 on August 15. SELL RECOMMENDATIONS
The A2 Milk Company (A2M)
The company’s Platinum infant formula is gaining traction in China. On August 22, 2017, the stock was priced at $4.47. The shares had risen to $8.57 by February 19, 2018 and reached $13.17 on March 21. The stock has since declined to close at $10.06 on August 15. Consider locking in some profits. Altium (ALU)
The software maker has enjoyed exceptional share price growth in the past year. The price has risen from $8.36 on August 15, 2017 to close at $21.80 precisely a year later. On August 15, the company’s price/earnings ratio was 65.83. Investors should consider taking profits.
Janine Cox, Wealth Within
BUY RECOMMENDATIONS TPG Telecom (TPM)
TPM turned a corner in September 2017 and has since demonstrated strong support at around $5. The stock is still well below the all-time high price of $12.70 a few years ago. There is a gap in price on the weekly chart at around $7.60, where we expect TPM to gravitate to over the next six to 12 months. The shares were trading at $5.88 on August 17. TechnologyOne (TNE)
TNE can be volatile, so it can represent a good trading opportunity for an experienced trader. A downtrend line can be applied on the weekly or monthly chart. The shares were priced at $5.12 on May 8, 2018 before falling to $4.12 on July 5. On August 17, the shares were trading at $5.14. Given the volatility, careful consideration is required for determining an appropriate stop loss if an entry opportunity arises.
HOLD RECOMMENDATIONS Domino’s Pizza Enterprises (DMP)
The company recently posted a record full year net profit after tax and lifted its dividend, but it still fell short of analyst expectations. It’s time to be proactive, not reactive, by ensuring a stop loss is in place in case DMP falls. The shares were trading at $55.39 on August 17. Santos (STO)
This energy giant has delivered solid gains in the past 12 months. Although the price gap on the weekly and monthly chart has been partially filled this year, there is still a risk of a price decline. Should STO trade strongly below $5.93, it may continue to fall. The shares were trading at $6.24 on August 17.
SELL RECOMMENDATIONS Seek (SEK)
The online job ads provider has invested heavily overseas and is likely to commence a period of adjustment, in our view. Seek was trading in an important price zone between $22 and $22.80 on August 17. According to our analysis, the recent peak of $22.63 on June 22, 2018 is likely to be the cycle high. The shares were trading at $22.28 on August 17.
Following the low at $2.95 in 2012, this investment manager rose to $14.42 on December 20, 2017. This has proven to be a psychological resistance level, as the price has failed to break above it despite several attempts. The shares were priced at $12.45 on August 13, 2018. The shares were trading at $11.53 on August 17. According to our technical analysis, CGF is likely to fall to between $9 and $9.50.
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