Stuart Bromley, Medallion Financial Group
NXT has been investing heavily in rolling out high quality data centres across Australia. Cloud computing is growing rapidly amid ever increasing demand for storage. NextDC is ideally positioned to capitalise in this lucrative space. This is a high margin business, with operating margins growing from 13.6 per cent in 2015 to 41.9 per cent in 2018.
Provides aftermarket auto parts to the wholesale and retail markets across Australia, New Zealand and, more recently, Thailand. Brands include Bursons, Autobarn and Autopro. Fiscal year 2019 EBITDA guidance is up 13 per cent to $170 million amid plans to steadily grow the number of Bursons and Autobarn outlets. Bapcor offers relatively defensive earnings and achievable growth.
Given current market volatility, we expect to see a shift towards Australia’s strongest companies and CSL certainly fits the bill. This global biotech giant, focusing on blood plasma products and influenza vaccines, was recently off around 18 per cent since its September high of $232.69, and we would hold at these levels. While there’s noise around a relatively high price/earnings ratio, this is largely due to the company realising a large amount of upfront research and development costs, which pressure current year earnings.
Recent quarterly reporting for a company treating sleep apnea continues to be strong, with double digit revenue growth across all major markets. While breathing machines and masks are the primary offering, software as a service delivered ResMed’s biggest growth of 25 per cent. The company is positioned to benefit from any fall in the Australian dollar.
Lovisa Holdings (LOV)
The positive of faster than expected international expansion has been offset by a slower start to fiscal year 2019. Comparable store sales were down 0.9 per cent. Lovisa is trading on reasonable multiples given its growth outlook, but we’re generally cautious about fashion jewellery retailers due to the fickle nature of shopper tastes.
Makes seeds and crop protection products. Nufarm has been impacted by drought and released disappointing fiscal year 2018 results. This business is at the mercy of the agricultural environment and one we wouldn’t be looking to hold at this point.
Michael Gable, Fairmont Equities
Macquarie Group (MQG)
From the September peak, MQG had pulled back in five waves to a low near $110. But a strong bounce indicates there’s a good chance we have seen the low for now. Because the decline occurred in five waves, we’re unlikely to push through to a new high in the short term, so the MQG share price should consolidate here. Any dips represent a buying opportunity. Once price consolidation is over, it will be ready to resume the longer term uptrend. Shares in this global diversified financial group closed at $118.81 on November 15.
Makes medical devices to treat and manage sleep apnea. It appears RMD has come back from the recent peak in five waves. It found support at the old low near $14, bouncing strongly from that level. It now looks like the dip is ready to be bought in RMD. A break above $16 is a signal for traders to perhaps add further to their position. The shares finished at $14 on November 15.
This supply chain logistics company has rallied strongly since the June low. After pulling back across September and October, the shares started to track sideways, making higher lows. It now appears the shares are close to breaking free of this pattern and are likely to move higher. Expect some light resistance near $11. But beyond that, we would be targeting a move to just above $12 to fill in a gap created in early 2017. The stock finished at $10.42 on November 15.
The share price of this software developer soared on its August results. It went from about $22 to more than $30 in two days. Since then, the market needed about 50 days for the selling to bring it back to $22. Volume was also lower on the way down. This means there is still some strength in the ALU share price, with support likely to come back in at these levels. The shares closed at $22.02 on November 15.
This online employment ads company produced a bearish engulfing pattern on the weekly candlestick chart in early September. This is a negative technical signal and the shares have been struggling ever since. Based on recent price action, we believe SEK shares will drift towards the low $16 levels. The shares closed at $17.82 on November 15.
Afterpay Touch Group (APT)
Operates a buy now, pay later platform. APT price action continues to remain poor, with the stock crucially failing at resistance near $15. In our view, there is every chance it will break below $10. We place support for it closer to $8. The shares closed at $11.69 on November 15.
Gavin Wendt, MineLife
PolarX is generating exciting drilling results from its Alaska Range Project, which hosts two deposits. The Zackly skarn deposit hosts a JORC (Joint Ore Reserves Committee) resource estimate of 3.4 million tonnes at 1.2 per cent copper. The high grade Caribou Dome sedimentary copper deposit hosts a JORC resource of 2.8 million tonnes at 3.1 per cent copper. Mineralisation at both prospects is open at depth and along strike and PXX is pursuing stand alone mining operations.
Todd River Resources (TRT)
Todd River is continuing to return significant drilling results from ongoing exploration work at its Mount Hardy project in the Northern Territory. The thick high grade intersection in the latest drill hole represents the deepest and northern most mineralised interval to date. Mineralisation extends to a depth of 450 metres from the surface. The results suggest there is potential for a new high grade base metal system that warrants a major exploration push by the company.
Allegiance Coal (AHQ)
The company has been a quiet achiever, focused on advancing its Tenas metallurgical coal project in British Columbia. Its major attraction is the potential for low cost production and strong earnings, along with relatively modest start up costs. Two pre-feasibility studies have already been completed, along with a revised resource estimate and geological model that should flow through favourably into a definitive feasibility study during the first quarter of 2019.
St George Mining (SGQ)
St George Mining is enjoying success with its ongoing drilling program to test electromagnetic conductors at its Mt Alexander project in Western Australia. In particular, results from the Investigators Prospect have returned the highest grade and the widest intercepts of nickel-copper-sulphide mineralisation so far. It continues the company’s 100 per cent strike rate of high grade nickel-copper-sulphide conductors across the Cathedrals Belt. St George’s share price performance over the past month reflects growing market interest.
Kin Mining NL (KIN)
Kin Mining NL had a simple plan to take its Leonora gold project into production, but the company’s ambitions have been foiled by board infighting, financial issues and problems with estimates in the original feasibility study. The company’s share price performance reflects this ongoing turmoil, but there’s the potential for things to get worse before they get better, with shareholders calling on the ASX to step in. Kin still has to raise further cash to pay back the $US3 million it still owes US investor Sprott.
Syrah Resources (SYR)
The share price has staged a recovery in recent weeks, but it’s still a far cry from when it was trading around $6 in 2016. The company was recently one of the most shorted stocks on the ASX, but rallied after announcing a sales agreement and the resumption of production at its Balama graphite project. There’s every chance this is just a short covering rally, with the potential for more downside ahead.
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