John Forwood, Lowell Resources Funds Management
Gold Road Resources (GOR)
Gold Road’s 50 per cent interest in a 300,000 ounce per annum gold mine development in Western Australia is on schedule to be in production by mid year, which should lead to a re-rating. Exciting exploration upside exists in surrounding ground. The shares have been trending up since early December to close at 80 cents on February 13.
This Alaskan zinc-copper-gold explorer has been sold down as drilling news dried up over the northern winter. Expect more investor focus from here, as news from the 2019 field season flows with more ore grade intercepts, testing of porphyry targets and JORC resource expansion. The shares closed at 6.4 cents on February 13.
Image Resources (IMA)
Delivered the zircon-rich Boonanarring mineral sands project in Western Australia on budget and on schedule. The share price has risen from 10 cents on December 20, 2018 to close at 17.5 cents on February 13. The share price rise brings enterprise value in line with project net present value. We expect a higher zircon price and mine life expansion.
Sandfire Resources (SFR)
Strong cash flows from the flagship DeGrussa copper mine and the addition of the Monty project extends mine life. The market is waiting on an accretive deal in the merger and acquisition space to shape the company post DeGrussa.
Newcrest Mining (NCM)
Our strategy is to gain leverage to a rising gold price through developing companies. Newcrest trades at a premium multiple compared to smaller gold miners. Take a profit in NCM and switch to Ramelius Resources (RMS).
Northern Star Resources (NST)
Northern Star has enjoyed a stellar market run over the past five years. First half underlying net profit grew 11 per cent on the prior corresponding period to $89.1 million. Lock in the profit and look for the next generation of emerging growth companies in the gold sector.
Michael Kodari, KOSEC
Aristocrat Leisure (ALL)
This gaming company operates in 90 countries. I consider it a quality growth story driven by its digital gaming arm. The business is trading at a relative discount compared to its 52-week high of $33.06 on July 30, 2018. The stock closed at $25.42 on February 13. Given, the price discrepancy, investors may want to consider buying ALL.
Beach Energy (BPT)
A great business to buy on price dips. Half year sales revenue was up 147 per cent to $955 million. Underlying net profit after tax was up 199 per cent to $279 million. This oil and gas producer aims to be debt free by the end of the March quarter. The company closed at $1.78 on February 13.
This blood products group reported a 10 per cent increase in first half net profit after tax to $US1.161 billion. Total revenue grew by 11 per cent to $US4.505 billion. CSL is arguably the most successful growth story on the ASX. It operates a quality business that continues to benefit from its global reach and market leading position.
The hearing implants maker is a solid business, continuing to expand through innovation and integrating technology into a standard healthcare product. The company has impressively rebounded after touching a 52-week low of $155.22 on November 20, 2018. The shares finished at $194.30 on February 13.
Harvey Norman (HVN)
A traditional bricks and mortar retailer that may struggle given the structural shift to online shopping. Investors are concerned about a weaker broader retail sector in an environment of softer housing prices and higher household costs.
G8 Education (GEM)
The share price of this childcare operator has been trending up since hitting a 52-week low of $1.88 on October 26, 2018. The shares closed at $3.51 on February 13. Investors can consider taking a profit. We prefer others.
Julia Lee, Bell Direct
This ship builder has a big contract with the US navy. As more ships are built, the company gains more expertise, higher margins and profitability. Austal recently and significantly increased full year revenue guidance. As the contract progresses, expect profitability per ship to increase.
Insurance Australia Group (IAG)
The company will continue to focus on capital management. Excess capital should continue to build, and there could be further returns if it sells residual holdings in Asia. IAG is currently looking at options for holdings in India and Malaysia. Net earned premiums and margins should continue over the next few years.
This Real Estate Investment Trust manages and directly invests in quality Australian office and industrial properties. The Sydney office market has been strong and a peak may be close. Beyond that, we see a softer outlook and this could be exacerbated by tenants demanding better deals.
Costa Group Holdings (CGC)
The share price of this fresh fruit and vegetable grower plunged in January after CGC downgraded guidance. The company blamed subdued demand for tomatoes, berries and avocados during December 2018. While the short term has been challenging, the long term picture still looks bright.
Qantas Airways (QAN)
Domestic and international passengers visiting Sydney have been falling in the past few months. Also, the Australian economy appears to be slowing and this could impact the business travel segment.
Domino’s Pizza Enterprises (DMP)
A recent update revealed softer sales in continental Europe. Domino’s UK blamed weather and integration challenges. There’s also downside risk to store rollouts given some new stores are probably cannibalising sales in Australia.
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