18 Share Tips – 1st July 2024

Oliver Matthew, Marcus Today

BUY RECOMMENDATIONS

BUY – Boss Energy (BOE) 

The company recently announced production had started at the 30 per cent owned Alta Mesa uranium project in Texas. The company reaffirmed it’s on track to produce a combined 3 million pounds of uranium a year. Uranium stocks have been sold off following a decline in spot prices. BOE offers strong long-term fundamentals. Favourable global political policies towards nuclear energy is another reason investors can consider buying BOE on share price weakness.

BUY – Treasury Wine Estates (TWE)

The global wine giant recently updated the market on earnings guidance for the Penfolds segment. It expects fiscal year 2024 earnings to range between $418 million and $421 million. The earnings margin is expected to be about 42 per cent before increasing to within a range of between 43 per cent and 45 per cent in fiscal year 2025. The company is re-investing in China after steep tariffs on imported Australian wine were removed earlier this year. We believe the company has good growth prospects in China.

HOLD RECOMMENDATIONS

HOLD – Woodside Energy Group (WDS)

The energy giant recently announced it had achieved first oil from the Sangomar field in Senegal. The Sangomar Field Development Phase 1 has a nameplate capacity of 100,000 barrels of oil a day. The production run-up for Sangomar is now de-risked. Crude oil prices recently ticked higher in June. We expect the share price to move above $29 before it starts a new uptrend.

HOLD – Nine Entertainment Co. Holdings (NEC)

The share price of this diversified media giant has fallen from $1.99 on January 3 to trade at $1.365 on June 27. Group revenue fell by 2 per cent in the first half of fiscal year 2024 when compared to the prior corresponding period. Earnings before interest and tax, and before specific items, were down 17 per cent. The company is keeping a tight rein on costs. Any upturn in the advertising market should lead to a share price recovery.

SELL RECOMMENDATIONS

SELL – WiseTech Global (WTC)

WiseTech develops software for the global logistics industry. WTC has been a strong performer. The share price finished at $101.75 on May 16. The shares were trading at $94.90 on June 27. WTC chief executive and major shareholder Richard White has indirectly sold shares recently in WTC. This stock is correlated to the performance of the NASDAQ in the US. The share price of WTC and other listed Australian technology stocks may be pressured if US technology stocks fail to meet expectations during the next reporting season. It may be prudent for WTC investors to cash in some gains at these levels. Risks in the short term outweigh rewards, in our view.

SELL – Fortescue (FMG)

The share price of this iron ore producer has fallen from $29.88 on January 31 to trade at $21.53 on June 27. The iron ore price has fallen during calendar year 2024. Iron ore shipments of 43.3 million tonnes in the third quarter of fiscal year 2024 were down 6 per cent on the prior corresponding period. The company says an ore car derailment and weather disruptions contributed to the decline in shipments. In the absence of a brighter economic outlook in China, or another country ramping up manufacturing activity, we believe FMG will remain under pressure.

Tony Langford, Seneca Financial Solutions

BUY RECOMMENDATIONS

BUY – Maas Group Holdings (MGH) 

Maas is a construction material, equipment and services provider. It operates across Australia. Government spending and economic development initiatives in the eastern states provide a long runway of growth opportunities, driven by ongoing infrastructure projects and property developments. Maas Group reaffirmed underlying EBITDA guidance to range between $190 million and $210 million in fiscal year 2024, representing growth of between 16 per cent and 28 per cent on the prior year.

BUY – ARB Corporation (ARB)

ARB makes and supplies 4-wheel drive accessories to Australian and international markets. The company is poised to generate revenue growth as the new car sales mix continues to show strong demand for 4-wheel drive vehicles. New vehicle sales in Australia in May 2024 were up 5.1 per cent on the prior corresponding period. The company’s overseas expansion, along with OEM (original equipment manufacturers) deals in the US remain growth drivers.

HOLD RECOMMENDATIONS

HOLD – Elders (ELD)

Elders is an Australian agribusiness. Sales revenue of $1.341 billion for the six months ending March 31, 2024, was down 19 per cent on the prior corresponding period. Underlying earnings before interest and tax of $38.4 million was down 54 per cent. The second half should improve following favourable weather conditions in winter crop regions and a potential recovery in livestock prices.

HOLD – New Hope Corporation (NHC)

The coal producer has associated coal port, oil and gas and agricultural operations. The company produced 2.5 million tonnes of saleable coal in the April quarter, an increase of 20.7 per cent on the previous quarter. Coal sales of 2.4 million tonnes was up 20.8 per cent. Underlying EBTIDA of $218.8 million was up 21.6 per cent. The company is forecasting the New Acland mine to ramp up to 5 million tonnes a year by fiscal year 2027.

SELL RECOMMENDATIONS

SELL – Bendigo and Adelaide Bank (BEN)

The bank announced unaudited cash earnings after tax of about $464 million for the 10 months ending April 30, 2024, a fall of 2.3 per cent on the prior corresponding period. The company’s share price responded positively to an improving net interest margin trend. However, I expect interest rates to stay higher for longer, leaving the economy under pressure. BEN’s shares have risen from $9.86 on May 15 to trade at $11.535 on June 27. Investors may want to consider taking a profit.

SELL – South32 (S32)

South32 is a globally diversified mining and metals company. It produces aluminium, silver, lead, zinc, nickel, among other commodities. It has operations in Australia, southern Africa and South America. The company reported revenue of $US3.133 billion in the first half of fiscal year 2024, a fall of 15 per cent on the prior corresponding period. In our view, other resource companies offer more appealing prospects. S32 shares have risen from $2.89 on March 26 to trade at $3.68 on June 27. Investors may want to consider cashing in some gains.

Toby Grimm, Baker Young

BUY RECOMMENDATIONS

BUY – CSL (CSL)

This blood products company continues to screen as undervalued relative to its historic multiples and peers. New products and improving margins are expected to drive compound annual net profit growth of about 21 per cent over the next three years.

BUY – Mirvac Group (MGR)

This diversified property developer and manager also appears undervalued, as it was recently trading at a discount of more than 30 per cent to our intrinsic valuation. The group has exposure to the struggling office segment despite its premium assets. A delay in global interest rate cuts has deferred an expected decline in financing costs. The shares have fallen to an attractive entry point for longer term investors.

HOLD RECOMMENDATIONS

HOLD – Qube Holdings (QUB)

Qube provides integrated import and export logistics services in Australia. The company has benefited from a strong recovery in car import volumes post the pandemic. Bulk commodity exports are expected to increase. QUB is an attractive long-term infrastructure investment.

HOLD – Orica (ORI)

This commercial explosives maker posted an 8.5 per cent fall in sales revenue for the half year ending March 31, 2024, when compared to the prior corresponding period. However, total earnings before interest and tax were up 9.6 per cent. The strategically sensible acquisition of Cyanco – a leading sodium cyanide manufacturer – paints a brighter outlook for a stock that we believe offers reasonable value at recent levels.

SELL RECOMMENDATIONS

SELL – Pro Medicus (PME)

This cloud-based medical imaging systems developer is undoubtedly one of Australia’s most impressive technology success stories in recent years. However, we believe the company’s share price outperformance increases the risk of a correction. The shares have risen from $66.48 on June 29, 2023, to close at $139.81 on June 27, 2024. We suggest investors consider taking some profits.

SELL – Sigma Healthcare (SIG)

The Australian Competition and Consumer Commission (ACCC) has raised preliminary competition concerns regarding Sigma’s proposed acquisition of Chemist Warehouse Group Holdings. There’s a possibility the proposed acquisition won’t proceed. If the proposed acquisition proceeds, any steps taken to win approval may impact future returns. Sigma’s share price has performed well since the proposed acquisition was announced. Investors may want to consider taking profits.

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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.