Tom Bleakley, BW Equities
Baby Bunting Group (BBN)
Sells baby products, such as prams, car seats and furniture online and at 52 locations across Australia. BBN recently reported comparable store sales growth of 9.5 per cent, a strong result in what has been a challenging Australian retail market. BBN should continue to enjoy tail winds after a large competitor closed its doors.
Focuses on distributing automotive aftermarket parts for servicing and repairing vehicles. We expect the car parts market to remain strong. Lower new car sales in Australia means more repairs for ageing vehicles. HOLD RECOMMENDATIONS
Develops and makes radio frequency monitoring systems for health care laboratories. Its smart chips can withstand extreme temperatures. BCT has recently signed a three-year, $15 million supply deal with Labcon North America, the world’s leading manufacturer of earth friendly laboratory consumables.
RBR Group (RBR)
Provides hired skilled labour to the resources sector, with a recent focus in Mozambique. Mozambique has an emerging energy sector, with large gas reserves. RBR holds one of Mozambique’s few labour broking licences. SELL RECOMMENDATIONS
Distributes plumbing products in Australia, New Zealand and the US. Australian dwelling approvals are expected to decline during the next two years amid negative sentiment surrounding the outlook for residential property. Consequently, we expect REH will experience a difficult trading environment.
JB Hi-Fi (JBH)
The consumer electronics giant reported first half net profit after tax of $160.1 million, a 5.5 per cent increase on the prior corresponding period. JB acknowledged increasing volatility in the Christmas quarter and January, with customers focusing more on spending when promotions are held. We continue to believe selling bulky goods will remain a challenge this year.
David Thang, PhillipCapital
Westpac Bank (WBC)
We expect the banks to continue attracting bargain hunters after they were beaten down following the fallout from the banking Royal Commission. Growing economies of scale, strong balance sheets and high credit ratings provide a strong platform for future growth. From a forward valuation perspective, we believe Westpac is more attractive compared to its peers.
BHP Group (BHP)
This global miner continues to be our preferred choice in the sector. The share price has risen substantially from $29.42 on November 30 to trade at $37.41 on March 7. Pays a solid fully franked dividend and is a good hold in any balanced portfolio.
Afterpay Touch Group (APT)
The share price of this buy now, pay later company has continued to trade higher. In the short term, further upside is likely towards the $21 to $23 region, in our view. Afterpay remains the market darling for investors seeking a play in the growth space. The shares were trading at $19.06 on March 7.
Bega Cheese (BGA)
Recently reported softer first half earnings and full year guidance. The shares have been in a downtrend, falling from $7.15 on September 12 to trade at $4.62 on March 7. With support expected at $4.48, a decisive break below this level would likely result in further falls, in our view. In the absence of any positive catalyst in 2019, we prefer others.
The share price of this investment manager and life services provider has made gains since an earnings downgrade in January. The shares have risen from $7.65 on January 23 to trade at $8.34 on March 7. But we believe stiffer competition in the annuities space is likely to be a key headwind for the company. Best to look elsewhere.
Simon Herrmann, wise-owl.com
IPH Limited (IPH)
IPH offers profitable exposure to demand for intellectual property protection. We’re attracted to its strong market positions in Australia and Singapore, which provide a solid and proven growth platform into broader Asia. The company’s historical growth trajectory is robust. Recent cost and capital management initiatives could potentially boost the bottom line.
Steadfast Group (SDF)
This insurance provider continues to deliver strong growth driven by price and volumes. Acquisitions have been well integrated to date, while key strategic initiatives have delivered shareholder value. Earnings per share growth trends appeal and we remain attracted to the company’s market position and growth outlook.
Afterpay Touch Group (APT)
While the long term growth outlook for this buy now, pay later platform provider remains compelling, investors should note the recent strong share price rally. Successful technology companies tend to trade at hefty premiums and they need to deliver sustained growth to justify high valuations.
Collaborate Corporation (CL8)
Operates in the sharing economy, enabling peer-to-peer renting of assets. Following a period of operational challenges and industry headwinds, Collaborate is committed to reviving its business with the recently announced car subscription service Carly, a strategic addition to its established drivemycar market. Carly is tapping into a potentially significant market, which is gaining good traction in the US and Europe.
Australis Oil & Gas (ATS)
ATS has onshore oil and gas assets in the US and Portugal. The shares have fallen from 39 cents on February 7 to trade at 24.2 cents on March 7. It recently raised capital at 35 cents a share. Better opportunities exist elsewhere.
Bega Cheese (BGA)
The first half result was impacted by stiffer competition, leading to higher farm gate milk prices. A lag in the timing of sales also had an impact. Additionally, given several technical sell signals, we have decided to look elsewhere in the short to medium-term.
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