18 Share Tips – 3rd June 2024

Nathan Lodge, Securities Vault

BUY RECOMMENDATIONS

BUY – Litchfield Minerals (LMS)

This recently listed pioneering copper explorer has projects in the Northern Territory. The copper price has continued its rally to recently breach $US11,000 a tonne. We like the outlook for copper as a critical mineral in a world transitioning to reducing carbon emissions. Consequently, we believe LMS should benefit over time from exploration in a dynamic sector.

BUY – 4DS Memory (4DS)

4DS is a semiconductor development company. It’s pioneering the development of persistent memory technology known as interface switching ReRam for next generation gigabyte storage class memory. It has facilities in Silicon Valley. The company generated revenue from ordinary activities of $165,007 for the half year ending December 31, 2023. The company also reduced its loss after tax compared to the prior corresponding period. The company offers potential in artificial intelligence. The shares were trading at 8.9 cents on May 30.

HOLD RECOMMENDATIONS

HOLD – Siren Gold (SNG)

SNG is a New Zealand based gold explorer. It has an 1100 square kilometre tenement package. It has numerous mines in the Reefton and Lyell goldfields and the Sams Creek porphyry dyke. The company recently released a positive drilling update in relation to the Auld Creek target within the Reefton project. The shares have risen from 6 cents on May 3 to trade at 8.1 cents on May 30.

HOLD – Sayona Mining (SYA)

Sayona Mining is a North American lithium producer. It also has prospective gold and lithium projects in the Pilbara region of Western Australia. The company recently announced that reverse circulation drilling had started at the Tabba Tabba lithium project in Western Australia. While the company released an encouraging update, the lithium sector remains under pressure. SYA shares have risen from 3.2 cents on May 2 to trade at 4.2 cents on May 30. Investors should monitor the news flow.

SELL RECOMMENDATIONS

SELL – Rincon Resources (RCR)

Rincon has three exploration assets in Western Australia. The assets are prospective for copper, gold, rare earth elements and other critical metals required for the transition to cleaner energy. The company recently secured firm commitments to raise $5.6 million at 10 cents a share. Most of the funds are designated towards expanding the West Arunta exploration project. Investors may want to consider cashing in some gains given the share price has risen from 2.7 cents on April 19 to trade at 10 cents on May 30. The shares did close at 14.5 cents on May 3.

SELL – Trigg Minerals (TMG)

Trigg Minerals is a diversified resources company developing base metals and gold projects in northern Queensland. It also has a sulphate of potash project in Western Australia. The company recently announced it had started a geophysics program at Breccia Hill, part of its Drummond Gold project in Queensland. The share price has fallen 2.1 cents on August 29, 2023, to trade at less than a cent on May 30. Investors may want to consider cutting their losses, or cashing in some recent gains in this speculative stock.

Peter Day, Sequoia Wealth Management

BUY RECOMMENDATIONS

BUY – Worley (WOR)

Worley is a global engineering and professional services company. The company’s factored sales pipeline was up 14 per cent this financial year to March 31, 2024. Sustainable related work represented 82 per cent of the factored sales pipeline. The company’s compound annual growth rate has risen 35 per cent between June 2021 and March 2024. Plans include growing margins through automation and generative artificial intelligence, while also targeting market share gains through its technology solutions pipeline.

BUY – Lynas Rare Earths (LYC)  

Total rare earth oxide production of 3545 tonnes in the third quarter of fiscal year 2024 was up from 1566 tonnes in the previous quarter, but down from 4348 tonnes in the prior corresponding period. Gross sales revenue of $101.2 million in the third quarter of fiscal 2024 was down from $136.2 million in the second quarter and from $242.8 million in the prior corresponding period. However, the Kuantan plant ramp-up was faster than expected, while Mt Weld was progressing to plan. We continue to believe LYC should command a premium associated with its processing capabilities. The shares have risen from $5.77 on April 2 to trade at $6.62 on May 30.

HOLD RECOMMENDATIONS

HOLD – Nufarm (NUF)

This crop protection and seed technology solutions company has guided for EBITDA to range between $350 million and $390 million in fiscal year 2024. We’re forecasting $374 million. Where it may land depends on the extent of a pricing recovery across crop protection in the second half, in our view. As of March 31, 2024, inventory was 20 per cent lower than the prior corresponding period.

HOLD – Car Group (CAR) 

CAR is an automotive classifieds advertising company. It has digital marketplace businesses in Australia, South Korea, the US and Chile. It’s a majority shareholder of webmotors in Brazil. The company’s share price has risen from $23.59 on June 1, 2023, to trade at $33.80 on May 30, 2024. The company lifted its interim dividend to 34.5 cents a share, up 21 per cent on the prior corresponding period.

SELL RECOMMENDATIONS

SELL – Treasury Wine Estates (TWE)

A positive for the company was China recently scrapping crippling tariffs on imported Australian wine. The company’s Penfolds brand remains prominent in China. It’s encouraging that TWE is exporting wine to China. But, in our view, it’s going to take time for company exports to China to reach pre-tariff levels. TWE shares have fallen from $13 on April 4 to trade at $11.08 on May 30. Investors may want to consider cashing in some gains.

SELL – Wesfarmers (WES)

In our view, this industrial conglomerate is trading on a lofty valuation. We have downgraded to a sell recommendation. In our view, there’s limited scope for earnings upgrades and the company is trading on peak cycle multiples. High interest rates and cost of living increases may deter shoppers from spending. The share price has fallen from $70.66 on May 7 to trade at $63.86 on May 30.

Jabin Hallihan, Auburn Capital

BUY RECOMMENDATIONS

BUY – Telstra Group (TLS)

The share price of this telecommunications giant has been drifting lower since early February. But TLS recently re-affirmed 2024 earnings guidance. Also, underlying EBITDA guidance is expected to range between $8.4 billion and $8.7 billion in fiscal year 2025. Management’s plans have shifted to re-setting and reducing costs in markets where growth has slowed. Postpaid mobile subscribers are approaching 9 million. Fair value is about $4.50 a share, in our view.

BUY – Australian Clinical Labs (ACL)

ACL is a private pathology provider, with more than 70 laboratories. Its SunDoctors brand specialises in detecting skin cancer and providing treatment. Based on unaudited management accounts to April 30, 2024, ACL recently re-affirmed that underlying earnings before interest and tax is expected to be at the lower range of between $60 million and $65 million in full year 2024. In our view, ACL is undervalued after a significant share price fall in the past year.

HOLD RECOMMENDATIONS

HOLD – Medibank Private (MPL)

Medibank is one of Australia’s biggest private health insurance providers. The company remains on track to deliver resident policyholder growth of between 1.2 per cent and 1.5 per cent in fiscal year 2024. The company’s Medibank and ahm brands serve more than 4.1 million customers. MPL has announced an average health insurance premium increase of 3.31 per cent from April 1, 2024.

HOLD – Aristocrat Leisure (ALL)

Aristocrat is the second biggest poker machine manufacturer in the world and a top tier mobile games publisher. First half results were better than expected, with operating revenue up 6.1 per cent on the prior corresponding period and net profit after tax up 16.8 per cent. The shares have performed solidly since early May to May 30, so we suggest holding for a possibly brighter performance.

SELL RECOMMENDATIONS

SELL – Technology One (TNE)

This software-as-a-service provider posted a strong first half year result in fiscal year 2024. Revenue from ordinary activities was up 20 per cent on the prior corresponding period and net profit was up 16 per cent. The shares have performed strongly since the result. In our view, the share price is overvalued, as we see it implying TNE sustaining high revenue growth, which we consider unlikely post the pandemic.

SELL – CSR (CSR)

CSR is a building products company in Australia and New Zealand. The company’s 2024 earnings met expectations. The CSR Board has agreed to a takeover bid from French group Saint-Gobain at $9 a share. CSR has entered into a binding scheme implementation deed with Saint-Gobain. The CSR board recommends shareholders vote in favour of the acquisition from Saint-Gobain in the absence of a superior proposal and an independent expert concluding the takeover bid is in the best interests of shareholders. Investors may want to consider cashing out now and investing elsewhere. The shares were trading at $8.92 on May 30.

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The above recommendations are general advice and don’t take into account any individual’s objectives, financial situation or needs. Investors are advised to seek their own professional advice before investing. Please note that TheBull.com.au simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of TheBull.com.au. You should seek professional advice before making any investment decisions.