Jonathon Howe, Red Leaf Securities
This hearing device company potentially has a product that could ultimately compete with hearing implants maker Cochlear. NUH was recently awarded a contract by the United Kingdom’s National Health Service to provide its IQbuds Boost hearing aid to adults and children suffering mild to moderate hearing loss. The company recently completed a $5 million capital raising to increase inventory of IQbuds Boost, with the intention of growing the sales pipeline through further contracts. This is a speculative stock. I own shares in NUH. The shares were trading at 8.3 cents on December 6.
A large theme in cyber/cloud security appears to be taking shape. This cyber security software firm was recently awarded a contract to provide a tailored version of its 360 Cyber Risk Framework to departments within the US Government, with the aim of protecting against supply chain intrusions. The 360 framework provides continuous insight across hundreds of vendors at once. Although speculative, WHK is certainly one to keep on the radar. The shares were trading at 5.1 cents on December 6.
Again, we reinforce the defensive attributes of this giant telecommunications company, having outperformed the All Ordinaries Index since July 1. TLS also paid a dividend in late September. In my view, Telstra is a must inclusion in super funds. Expect it to benefit with the 5G rollout. The stock has risen from $2.601 on July 2 to trade at $3.02 on December 6.
Westpac Bank (WBC)
The stock was priced at $30.33 on August 17 this year. The stock has since suffered a sharp correction to trade to $25.38 on December 6. At these levels, approaching multi-year lows, we believe the bank offers value and presents a strong investment case.
Afterpay Touch Group (APT)
This buy now, pay later platform provider has been a stellar performer in the past 12 months. Its year low was $4.90 on December 6, 2017. The stock was trading at $13.01 precisely a year later. However, in my view, the stock is priced to perfection given a market capitalisation above $3.1 billion on December 6, 2018. There is little room for error, despite a good response from US retailers, so we have a cautionary sell on the stock at this point.
Qantas Airways (QAN)
Another large market capitalisation stock struggling to achieve new highs. The shares were priced at $6.83 on August 21, 2018. The stock was trading at $5.72 on December 6. Even so, the market capitalisation was still about $9.42 billion on December 6. Given the price retreat, we believe it may be prudent to reduce holdings and pocket some profits.
Tony Locantro, Alto Capital
Metal Bank (MBK)
MBK have recently announced the discovery of a large scale mineralised hydrothermal system at the 8 Mile Project in Queensland. MBK now has three Queensland gold projects with multi million ounce potential, where high risk/high reward exploration will intensify. MBK will either go it alone, or through joint venture expenditure in calendar year 2019. The shares closed at 1.2 cents on December 6.
The world’s first wearable garment has been made using the company’s eco friendly, tree-free rayon fibre sourced from sustainable coconut waste. The knitted sweater marks a breakthrough for an industry urgently seeking sustainable alternatives to clothing made from traditional rayon and cotton, which NC6 claims causes environmental issues. The key for NC6 is to develop a supply chain over coming months and to increase fibre production. The shares finished at 8.8 cents on December 6.
1AD is developing a new class of protein therapeutics known as i-bodies to treat human diseases. AD-214 is the advanced lead fibrosis drug candidate with significant pre-clinical validation. The enhanced AD-214 has been delayed and material should available for toxicity studies in May 2019. Institutional investors make up 60 per cent of 1AD’s register, with the top 20 holding 80 per cent.
Alto Metals (AME)
This gold explorer has already shown there’s potential for the Sandstone belt region in Western Australia to host significant gold deposits. AME’s exploration model is proving successful. Drilling at depth, we expect further gold discoveries during the next 12 months. There remains upside potential on success. Potential corporate activity exists as the majors look to replenish ounces.
Afterpay Touch Group (APT)
The Australian Securities and Investments Commission is reviewing the buy now pay/pay later sector. Also, given increasing competition in the sector, we believe the risk/reward equation for APT appears to be to the downside. The sector attracts negative attention when younger shoppers are left in financial difficulties after buying what they can’t afford. This may be a catalyst for stringent regulation.
It may be prudent to take some profits, as this supermarket giant has enjoyed a good run since mid September to close at $29.02 on December 6. Competitor Coles, spun out of Wesfarmers, recently listed on the ASX and will provide fierce competition. Also, shoppers are more wary about retail prices in times of a falling housing market. Frugal shoppers may buy less, or sift out cheaper alternatives at bargain hunting stores.
Peter Moran, Wilsons
Ruralco Holdings (RHL)
Despite challenging trading conditions, this Australian agribusiness reported stronger than expected earnings growth. Reported net profit after tax was up 12 per cent to $25.2 million for the year ending September 30. The solid result was driven by growth in its rural supplies and water services businesses. Also, the company showed good cost control. We expect Ruralco to benefit from consolidation in the rural services sector, as it continues to acquire smaller players through bolt-on acquisitions. Monadelphous Group (MND)
We view this engineering contractor as a high quality operator, offering competent and disciplined management. After several lean years, it will benefit from an increasing number of new resource projects. This, combined with growing infrastructure and maintenance demand provides a positive outlook.
Afterpay Touch Group (APT)
Afterpay has a great brand and has done a good job building its position as a buy now, pay later platform services provider. However, potential short term issues, such as regulatory uncertainty, relatively low margins in the US business and an increasingly volatile IT sector provide possible near term headwinds.
Coles Group (COL)
A competitive operator, but supermarket competition is fierce. Also, it has an underperforming convenience business, so we see little group earnings growth for the next two years. However, long term prospects are solid and the shares look fairly priced with a good yield. The shares closed at $12.10 on December 6. SELL RECOMMENDATIONS
Wagners Holding Company (WGN)
This construction materials company recently downgraded 2019 first half guidance. Although the share price has fallen, we believe it doesn’t yet factor in the weakness we expect from lower volumes and the impact that will have on prices. DuluxGroup (DLX)
This supplier of paint and other building products recently reported results below our expectations. The company has provided guidance for higher earnings this financial year, but we believe a slowing housing market and higher input costs will make this difficult to achieve.
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