18 Share Tips – 11th November 2024

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Philippe Bui, Medallion Financial Group

BUY RECOMMENDATIONS

BUY – Megaport (MP1)

Megaport provides network-as-a-service solutions. After a meteoric fall from grace caused by high expectations and muted fiscal year 2025 guidance, Megaport’s share price now looks attractive. The shares have fallen from $15.39 on March 14 to trade at $7.22 on November 7. The stock is now trading on its lowest revenue multiple in some time. We feel comfortable about buying the stock. If the company can continue to grow earnings and revenue, the share price should follow. The company generated total revenue of $195.3 million in fiscal year 2024, up 28 per cent on the prior corresponding period.

BUY – Unico Silver (USL)

With spot silver prices moving higher, USL has performed well in calendar year 2024. It recently closed out a capital raising. USL has a resource base of 160 million ounces of silver equivalent and plenty of cash on its balance sheet. It offers an experienced management team, and we expect the stock to continue to re-rate. USL remains a high growth speculative buy and our preferred silver exposure on the ASX.

HOLD RECOMMENDATIONS

HOLD – Credit Corp Group (CCP)

CCP is a debt buyer and collector. It delivered a solid first quarter update in fiscal year 2025. Conditions in the US continue to improve, and the business is showing signs of building momentum after some strong debt ledger buying last year. Cash collections in the US were up 12 per cent year- on-year. Considering a modest price/earnings ratio and solid fundamentals, we believe this stock could be at the start of its longer term turnaround.

HOLD – PolyNovo (PNV)

The company provides dermal regeneration solutions via its NovoSorb biodegradable polymer technology. Revenue grew 57.5 per cent in fiscal 2024 when compared to the prior corresponding period. Product sales were up 54.5 per cent. The company reported net profit after tax of $5.3 million compared to a loss of $4.9 million in the prior year.  Although no guidance has been given, consensus among analysts is for revenue to grow 35 per cent in fiscal year 2025. Since 2020, the company has expanded into new overseas markets, generating strong growth in the US in fiscal year 2024.

SELL RECOMMENDATIONS

SELL – Commonwealth Bank of Australia (CBA)

Statutory net profit after tax of $9.481 billion in fiscal year 2024 was down 6 per cent on the prior corresponding period. The net interest margin of 1.99 per cent was down 8 basis points. The shares have risen from $100.69 on November 8, 2023, to trade at $146.785 on November 7, 2024. The company was recently trading on a lofty price/earnings ratio above 25, and has benefited from a higher interest rate environment. However, a fiercely competitive mortgage and loan environment make it hard for us to see a compelling case for CBA at these levels. Investors may want to consider cashing in some gains.

SELL – JB Hi-fi (JBH)

The first signs of a slowing property market amid easing inflation paint a weaker outlook for consumer spending. Interest rate cuts are forecast in 2025, but reductions can take time before restoring consumer confidence. JB Hi-Fi has enjoyed an incredible run. Shares in this consumer electronics giant have risen from $46 on November 8, 2023, to trade at $82.025 on November 7, 2024. Investors may want to pocket some profits. If consumer spending slows, JBH may experience challenging times in the year ahead.

Niv Dagan, Peak Asset Management

BUY RECOMMENDATIONS

BUY – NoviqTech (NVQ)

The company harnesses artificial intelligence and distributed ledger technology to provide transparent reporting across supply chains, carbon emissions and guarantee of origin. Its carbon central platform, which uses artificial intelligence to create a digital twin for companies, has signed up Global Resource Recovery in the Northern Territory and Power Sync in the US. The company is gaining momentum. The Securities and Exchange Commission in the US has made it mandatory for large companies to disclose their greenhouse gas emissions in 2025. We believe NVQ will start to generate some strong cash flows. The shares were trading at 2.2 cents on November 7.

BUY – Patagonia Lithium (PL3)

Patagonia Lithium recently secured a 19.9 per cent strategic shareholder to its register. Dr Jose Manzano, the founder of Integra Capital, is a prominent Argentinian businessman. Integra were early stage investors in Latin Resources, which recently received a takeover offer from Pilbara Minerals (ASX: PLS) for $560 million. Patagonia has a strong balance sheet and has just completed drilling its fourth well. The next catalyst is a mineral resource estimate. We feel the stock is under-valued.

HOLD RECOMMENDATIONS

HOLD – Lanthanein Resources (LNR)

This explorer focuses on discovering lithium and rare earth elements in tier 1 mining jurisdictions in Western Australia and South Australia. Also, the company has received a program of work grant to drill the Lady Grey project at Mt Holland in WA’s Yilgarn Province. The province is known for the historical Bounty gold mine that produced about 1.3 million ounces of gold adjacent to the Lady Grey project tenements. The program of work grant enables the company to drill test a modelled conductor plate under Moving Loop EM (MLEM) survey line #6. The program of work was granted by the WA Department of Energy, Mines, Industry, Regulation and Safety. It’s an exciting development, but we are waiting on results. LNR is a speculative hold and was trading at less than a cent on November 7.

HOLD – Advance Metals (AVM)

AVM recently acquired the Yoquivo project, a high-grade silver mine in Mexico, which has an existing resource estimate of 17.23 million ounces of silver equivalent at a grade of 570 grams a tonne. This acquisition comes at a time of record high silver prices and follows extensive drilling by Golden Minerals, which has identified numerous high-grade silver intersections. Recently, the stock has performed strongly, but we feel that it’s fully priced at these levels. The shares were trading at 4.1 cents on November 7.

SELL RECOMMENDATIONS

SELL – HMC Capital (HMC)

HMC is a diversified alternative asset manager. It focuses on real estate, private equity, energy transition, digital infrastructure and private credit. It recently completed a fully underwritten $300 million institutional placement, issuing about 34 million new shares at $8.75. The funds raised will help finance the acquisition of Global Switch Australia. The shares were trading at $10.33 on November 7. Although the company is well funded, we believe there’s some stock overhang at these levels. We hold a reduce recommendation.

SELL – Qantas Airways (QAN)

Investors have flocked back to the airline during 2024, driving up shares from $5.35 on January 2 to trade at $8.28 on November 7. The company recently announced that trading in the first half of fiscal year 2025 was in line with expectations amid stable demand for Qantas and Jetstar. However, geopolitical events can create uncertainty in a fiercely competitive and volatile sector that potentially may impact margins moving forward. Given the share price rise, investors may want to consider locking in some profits.

Tony Paterno, Ord Minnett

BUY RECOMMENDATIONS

BUY – CSL (CSL)

CSL is a global biotechnology company. CSL recently re-affirmed fiscal year 2025 guidance. It’s forecasting net profit after tax and amortization (NPATA) to range between $US3.2 billion and $US3.3 billion, reflecting constant currency growth of between 10 per cent and 13 per cent, with a $US50 million currency headwind. According to our analysis, this headwind implies consensus NPATA of $US2.27 billion, which is 0.6 per cent above the top end of guidance.

BUY – Coles Group (COL)

The supermarket giant provided a solid update for the first quarter of fiscal year 2025. The company has demonstrated strong execution, posting solid first quarter sales and clear cost discipline. Total group sales revenue of $10.548 billion were up 2.9 per cent on the prior corresponding period. Tightly managed capital expenditure should reward shareholders with healthy free cash flow and dividends. Beyond fiscal year 2025, Coles has several earnings drivers underpinning our confidence in earnings growth. In our view, the risk-reward is attractive, with Coles recently trading at a discount to rival Woolworths.

HOLD RECOMMENDATIONS

HOLD – Insignia Financial (IFL)

This financial services company recently provided a business update for the first quarter of fiscal year 2025. It lifted funds under management and administration by 2.7 per cent to $319.6 billion as at September 30, 2024. Total net outflows for the quarter were $1 billion. Investors responded positively to the update given the stock’s deeply discounted valuation. Potential exists for further cost rationalisation initiatives.

HOLD – AMP (AMP)

Assets under management across platforms and superannuation and investment businesses rose in the third quarter of fiscal year 2024 when compared to the prior quarter. The quarterly update was positive, with businesses stabilising. In our view, AMP’s earnings in calendar year 2025 are likely to be tied to market movements, so investors should be somewhat cautious on nominal asset and cash flows. AMP shares have risen from 93 cents on January 2 to trade at $1.507 on November 7.

SELL RECOMMENDATIONS

SELL – Wesfarmers (WES)

WES provided a trading update at its annual general meeting. The key takeaway was Australian consumers are continuing to prioritise value. Retailers Bunnings and Kmart met expectations. Officeworks noted weaker business customer performance and Wesfarmers Industrial and Safety reported softer trading. We remain cautious on Wesfarmers given the potential for downgrades to consensus estimates amid an elevated valuation.

SELL – Bank of Queensland (BOQ)

BOQ posted fiscal year 2024 earnings ahead of consensus forecasts. The net interest margin in the second half proved stronger than market expectations. A key investor focus is the ongoing restructuring of the business, including a transformation to a digital bank. BOQ has announced it would convert all 114 of its owner managed branch network to corporate branches, which is expected to be completed by March 2025. Executing these plans carries risk. Fierce competition in retail and business banking is unlikely to abate any time soon. Other banks are further along the digitisation timeline.

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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.