18 Share Tips – 10th June 2024

John Athanasiou, Red Leaf Securities

BUY RECOMMENDATIONS

BUY – Tinybeans Group (TNY)

TNY operates a private photo-sharing app and media platform that connects millions of users. The company recently completed a capital raising to fund growth initiatives. We like the company’s outlook. We are confident chief executive Zsofi Paterson has the skills, experience and management team to generate growth. In our view, the stock offers an attractive entry point as it was priced at 7.5 cents on June 6.

BUY – REA Group (REA)

REA Group holds a dominant position in the online classifieds real estate market. The company’s strength is reflected in an impressive track record of consistently delivering annual earnings growth in the past decade. Looking ahead, possible interest rate cuts paint a bright outlook for the real estate market and REA’s prospects.

HOLD RECOMMENDATIONS

HOLD – IDP Education (IEL)

The company provides international student placements. It co-owns the world’s most popular English language tests. IDP Education remains a quality business, but we have regulatory concerns about possible cuts to net migration in Australia. Also, the company expects the international education market to decline between 20 per cent and 25 per cent in the next 12 months. It remains confident about the longer term. While IDP’s fundamentals are robust, the company recently announced that adjusted earnings before interest and tax in fiscal year 2024 are expected to be broadly in line with the prior year. The company is implementing a cost cutting program. We suggest monitoring developments closely.

HOLD – Sigma Healthcare (SIG)

Sigma Healthcare is undergoing a proposed merger with Chemist Warehouse, a development that bears potential, but also carries regulatory risk. The proposed merger is subject to approval by the Australian Competition and Consumer Commission (ACCC) and shareholders. We are optimistic a merger will proceed, but remain cautious until the ACCC reaches a decision.

SELL RECOMMENDATIONS

SELL – BrainChip Holdings (BRN)

Shares in this artificial intelligence company rose from 17.5 cents on January 3 to close at 49 cents on February 26. The shares were trading at 22.5 cents on June 6. BRN is a speculative stock. The company posted a net loss after tax of $US28.9 million for the year ending December 31, 2023. Other stocks appeal more at this stage of the cycle, so investors may want to consider cashing in some gains.

SELL – Zip Co (ZIP)

Revenue of $219.2 million in the third quarter of fiscal year 2024 was up 26.6 per cent on the prior corresponding period. The revenue margin improved to 9.1 per cent. The shares have risen from 59 cents on January 3 to trade at $1.185 on June 6. We believe the share price has risen too rapidly and is trading at a premium. We’re also concerned about inflationary pressures in the US impacting consumer spending. Investors may want to consider taking a profit at these levels.

Philippe Bui, Medallion Financial Group

BUY RECOMMENDATIONS

BUY – Audinate Group (AD8)

AD8 is an audio-visual networking software developer. This technology company still appears to be in the early stages of a long-term growth trajectory. The business is now growing quickly in the video segments. The share price has retreated to an attractive entry point after reaching an all-time high of $23.51 on the back of a strong report in February. AD8 is currently the top holding in our Australian equities growth fund. The shares were trading at $16.17 on June 6.

BUY – Challenger (CGF)

CGF is the largest provider of annuities in Australia. The company went through a tough cycle when interest rates were at all-time lows. In today’s environment, its products are much more attractive for older investors looking for an income stream. The business was recently trading on an undemanding price/earnings multiple and a fully franked dividend yield of almost 4 per cent. CGF recently re-affirmed full year results at the top end of its guidance range.

HOLD RECOMMENDATIONS

HOLD – Evolution Mining (EVN)

EVN is one of Australia’s lowest cost gold producers. After acquiring an 80 per cent interest in the Northparkes mine in early December, the company now has significant exposure to copper. Recent gold and copper prices have more than offset spikes in operating and capital expenditure. With little company hedging in place, EVN can take advantage of strong spot prices. This should help the business to continue deleveraging its balance sheet and reduce debt costs.

HOLD – Telix Pharmaceuticals (TLX)

This commercial stage biopharmaceutical company has been a star stock.  Recently, TLX announced promising trial results for its prostate cancer drug therapy candidates. Since getting approval for its diagnostic product two years ago, the company is generating revenue of almost $150 million a quarter. In our view, this is a stock with long term potential that could easily continue to impress.

SELL RECOMMENDATIONS

SELL – Yancoal Australia (YAL)

YAL is involved in nine producing coal mines across Australia. The shares have risen from $4.57 on November 7, 2023, to trade at $6.33 on June 6, 2024. Company performance can hinge on the underlying thermal coal price. The overall realised coal price declined 8 per cent for the quarter ending March 31, 2024, when compared with the fourth quarter of fiscal year 2023. We’ve been selling the stock on behalf of investors to crystalise gains amid exploring other opportunities.

SELL – Adairs (ADH)

ADH is a furniture and homewares retailer. Statutory revenue from continuing operations for the 27 weeks ending on December 31, 2023, was down 6.7 per cent on the 26 weeks in the prior year. Profit after tax from continuing operations was down 18.9 per cent. The cost-of-living crisis is impacting retail spending. The shares have fallen from $2.60 on March 27 to trade at $1.717 on June 6. Better growth options exist elsewhere, in our view.

Harrison Massey, Argonaut

BUY RECOMMENDATIONS

BUY – Patriot Battery Metals Inc (PMT)

Patriot is a hard rock lithium exploration company. It owns the tier 1 Corvette property in Canada, with a current JORC resource of 109.2 million tonnes at 1.42 per cent lithium oxide. The company is due to release an updated resource estimate in the third quarter of calendar year 2024. Corvette has the potential to underpin a spodumene concentrate project of more than 1 million tonnes per annum, with further exploration results the key catalyst for the share price moving forward.

BUY – Genesis Minerals (GMD)

Genesis is in an enviable position with 3.3 million ounces of gold in group ore reserves amid a potential production profile of 3 million ounces during the next 10 years. The company is fully funded with cash and bullion of $181 million and zero debt. The company is well positioned for more merger and acquisition opportunities in the future. Company chief executive Raleigh Finlayson has a strong track record in the sector.

HOLD RECOMMENDATIONS

HOLD – Coles Group (COL)

The supermarket giant posted sales revenue from continuing operations of $10.033 billion in the third quarter of fiscal year 2024, a 6.4 per cent increase on the prior corresponding period. This was a solid result, in our view. Its market share should assist in sustaining performance despite any potential political headwinds it may face from inquiries into supermarket prices.

HOLD – Inghams Group (ING)

This poultry company lifted revenue and net profit after tax in the first half of fiscal year 2024 compared to the prior corresponding period. The fully franked interim dividend was 12 cents a share. Core poultry volumes were up 2.2 per cent. In response to the recent bird flu outbreak in Victoria, the company has implemented enhanced biosecurity measures on top of already strict standard protocols throughout its Victorian operations. The company announced on May 22 that it has no commercial broiler farms in the affected region.

SELL RECOMMENDATIONS

SELL – Xero (XRO)

This accounting software provider posted a solid fiscal year 2024 result, with free cash flow more than tripling during the period. Operating revenue grew twice as fast as subscriber numbers, highlighting the company’s aggressive growth strategy. Yet, the company didn’t pay a dividend. The Xero share price has risen strongly since late November 2023 to trade at $126.32 on June 6, 2024. Given the strong share price run, it may be prudent to take a profit.

SELL – The a2 Milk Company (A2M)

The share price of this infant formula company has performed strongly between mid-April and June 6, 2024. Company revenue was up 3.7 per cent in the first half of fiscal year 2024 compared to the prior corresponding period. Continuing growth in the China and other Asia segment helped drive revenue growth. Net profit after tax was up 15.6 per cent. However, the company didn’t declare a dividend. Investors may want to consider taking a profit on share price strength.

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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.