18 Share Tips – 16th December 2024

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Christopher Watt, Bell Potter Securities

BUY RECOMMENDATIONS

BUY – Amotiv (AOV)

Amotiv, formerly GUD Holdings, owns a portfolio of companies specialising in providing automotive products and solutions. Non-internal combustion engine (ICE) revenue streams now represent 75 per cent of total sales, providing a stronger, more future-oriented portfolio. A diversified global footprint taps into growth markets in South Africa and Europe via Rindab. AOV’s recent forward price/earnings multiple looks undemanding given its financial strength, geographic expansion, better quality earnings and reduced risk. We view AOV as a sustainable growth story in the medium to long term that’s yet to be fully appreciated by the market. We believe it’s an appealing buying opportunity.

BUY – Endeavour Group (EDV)

Endeavour operates liquor outlets, hotels and gaming facilities. This leading Australian liquor retailer includes brands, such as Dan Murphy’s and BWS. It stands to benefit from a forecasted rebound in retail spending in fiscal year 2025. Economic conditions, including an expanding workforce, higher wages and possible income tax cuts could all boost consumer confidence, lifting demand for EDV’s broad retail offerings. The market may not fully reflect a strengthening retail environment in EDV’s valuation, making it an appealing entry point. As buying power increases, EDV’s earnings growth and share price could follow suit.

HOLD RECOMMENDATIONS

HOLD – Domino’s Pizza Enterprises (DMP) 

Recent sales have lagged internal targets, possibly hinting at slower short term growth. However, there is room for cautious optimism led by a new chief executive officer. In our view, cost controls, more efficient media spending and aggregator partnerships could support earnings before interest and tax margin targets of between 10 per cent and 12 per cent. But near-term uncertainty suggests a wait-and-see approach. The shares have risen from $28.46 on November 14 to trade at $29.58 on December 12.

HOLD – GPT Group (GPT)

GPT is a diversified property group. GPT’s stable occupancy rates, robust industrial demand and productive funds management strategy support a balanced outlook. Total occupancy was 97.9 per cent, according to the September 2024 quarterly update. Leasing spreads and specialty retail sales growth remain encouraging. Growth in the GPT wholesale shopping centre fund and the GPT wholesale office fund indicate potential for medium term upside. Nevertheless, macroeconomic uncertainties persist, leaving GPT as a hold recommendation until clearer catalysts emerge.

SELL RECOMMENDATIONS

SELL – National Australia Bank (NAB) 

The full year 2024 result aligned with expectations, but underlying signals raise concerns, according to our analysis. While cost efficiencies offset marginally higher bad debts and softer revenue, the bank’s premium valuation looks vulnerable. Modest net interest margin pressure and rising non-performing exposures highlight risk. In this environment, NAB’s upside appears limited, while selling protects against potential downside.

SELL – Bank of Queensland (BOQ)

The bank delivered a better-than-expected fiscal year 2024 result, leading to a near term share price lift. Cost reduction initiatives are encouraging. However, the market’s optimism may be short lived given the bank’s ambitious revenue growth targets during the next two years and complex strategic transformation. The shares have risen from $5.92 on July 1 to trade at $6.665 on December 12. Investors may want to consider cashing in some gains.

Tony Paterno, Ord Minnett

BUY RECOMMENDATIONS

BUY – MyState Limited (MYS)

MYS is a national diversified financial services group. Brands include MyState Bank and TPT Wealth. The long term value on offer in MYS is compelling, in our view. Strong earnings per share growth, a high fully franked dividend yield and a competent management team support our view. MyState Bank has proposed acquiring Auswide Bank by way of a scheme of arrangement. Auswide shareholders will vote on the proposed scheme on February 3, 2025. MYS is an attractive income stock and should generate capital growth from synergies in the proposed acquisition.

BUY – WiseTech Global (WTC)

WiseTech develops and provides software solutions to the global logistics industry. We hold a positive view on WiseTech’s products and its strong presence in the logistics industry. At its fiscal year 2024 results, WiseTech announced it had had rolled out its core CargoWise product to 52 large global freight operators, including more than half of the world’s top 25 freight forwarders. CargoWise revenue was up 33 per cent in fiscal year 2024 when compared to the prior corresponding period. The company lifted total revenue by 28 per cent in fiscal year 2024.

HOLD RECOMMENDATIONS

HOLD – Amcor PLC (AMC)

AMC has unveiled an acquisition plan for rival US listed packaging group Berry Global Group in a $US8.4 billion stock swap. AMC is aiming to capture targeted cost savings and revenue benefits of $US650 million per annum within three years of the acquisition’s completion. The acquisition should be strongly earnings per share accretive, although we question whether the expected improvement in margins can be sustained over the longer term.

HOLD – Redox (RDX)

Redox imports and distributes chemicals, ingredients and raw materials. RDX has achieved a substantial re-rating in the past 12 months. It now trades at a slight premium to the average of its global peer group on a fiscal year 2025 price/earnings basis. While we continue to view RDX as a high quality company operating in a structurally attractive industry, we lower our rating to hold on valuation grounds.

SELL RECOMMENDATIONS

SELL – Jumbo Interactive (JIN)

Jumbo is a digital lotteries retailer. It also provides proprietary lottery software platforms and management expertise to the charity and government lottery sectors in Australia and across the world. The company recently released a trading update based on unaudited management accounts. Unaudited group revenue was down 8.1 per cent in the four months to October 31, 2024, when compared to the same period last year. Unaudited group total transaction value (TTV) was down 4.9 per cent and lottery retailing TTV was down 11.8 per cent. The subdued jackpot environment contributed to the weaker numbers. The shares fell from $18.10 on February 29 to close at $12.52 on November 8. The stock has risen to trade at $14.07 on December 12. We still see risk to the share price, so investors may want to consider cashing in some gains.

SELL – Regis Resources (RRL)

Regis is a gold producer and explorer. The company generated revenue of $1.263 billion in fiscal year 2024, an increase of 11 per cent on the prior corresponding period. However, the company posted a statutory net loss after tax of $186 million, which was significantly more than the $24 million loss after tax in full year 2023. The 2024 loss was driven by pre-tax costs from closing the hedge book, hedge losses and non-cash impairments primarily related to its McPhillamys project. The company didn’t declare a dividend. Regis is fully leveraged to the gold price, which can move in either direction. Other gold stocks appeal more at this stage of the cycle.

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BUY RECOMMENDATIONS

BUY – Native Mineral Resources Holdings (NMR)

NMR has recently acquired the BlackJack gold processing mill near Charters Towers in Queensland. NMR is planning to refurbish the plant and resume mining from the Black Jack and Far Fanning gold deposits in 2025. Managing director Blake Cannavo has extensive experience building mines, which gives us confidence that work will be completed on time. The gold price has performed strongly in the past 12 months. There are many mining leases in northern Queensland requiring ore processing. NMR is equipped to potentially increase project life through partnerships. I own NMR shares.

BUY – Vertex Minerals (VTX)

Vertex is re-starting the Hill End gold project in central New South Wales. Previously, one of the highest grade gold deposits, first gold pour is expected in January 2025. Its February 2024 pre-feasibility study indicated gold production of 49,890 ounces over two years at an all-in-sustaining cost of $A1833 an ounce. If VTX can successfully commission the mill and mine, it should perform well. The shares have risen from 9.1 cents on August 20 to trade at 19.5 cents on December 12. I own VTX shares.

HOLD RECOMMENDATIONS

HOLD – Pinnacle Investment Management Group (PNI) 

Pinnacle is a global multi-affiliate investment management firm. Pinnacle’s affiliate managers have consistently increased funds under management over the past 10 years to reach $110 billion at June 30, 2024, an increase of 20 per cent on the previous year. Pinnacle has significantly benefited from offering leverage to the broader market. The share price has risen from $10.16 on January 2 to trade at $22.89 on December 12.

HOLD – Lotus Resources (LOT)

Lotus is a uranium company focusing on Africa. The company is fully funded to re-start production at the Kayelekera Uranium project in Malawi in the third quarter of 2025. LOT recently raised $130 million via a placement to support the capital costs of the re-start. We expect a uranium supply deficit from 2025, which should be a driver of the underlying commodity price.

SELL RECOMMENDATIONS

SELL – Commonwealth Bank of Australia (CBA) 

CBA is the best Australian bank, in our view. It has a strong balance sheet, and its CET1 capital ratio remains well above the minimum regulatory requirement at the end of the first quarter of fiscal year 2025. The company posted an unaudited cash net profit after tax of $2.5 billion in the first quarter, which was flat on the prior comparative period. The shares have risen from $109.52 on December 14, 2023, to trade at $157.60 on December 12, 2024. The bank was recently trading on a lofty price/earnings ratio above 27. With low economic growth expected in 2025, we see the recent share price run as moving too high too rapidly. We suggest investors consider cashing in some gains.

SELL – Syrah Resources (SYR)

Syrah is an African based graphite producer. Its Balama graphite operation is in Mozambique, where civil unrest halted production. SYR informed the market on December 12, 2024, that protest actions had triggered events of default in the company’s loans with the US International Development Finance Corporation (DFC) and the US Department of Energy (DOE). SYR has been engaging with the DFC and DOE. Syrah also has a downstream active anode material facility in the US. The company posted an operating cash flow loss of $US19.183 million in the September quarter of 2024. The operating cash flow loss for the nine months ending in September 2024 was $US62.596 million. The shares have fallen from 66.2 cents on January 2 to trade at 19.5 cents on December 12. In the absence of a near term resolution to civil unrest in Mozambique and a turnaround in the graphite price, the stock price is likely to remain under pressure, in our view.

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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.