18 Share Tips – 10th February 2025

Welcome to this week’s edition of 18 Share Tips – our weekly selection of top ASX shares, chosen by leading analysts, that we think are worth considering.

This week Harrison Massey of Argonaut, John Edwards of Novus Capital  and Damien Nguyen of Morgans share their ‘Buy’, ‘Hold’ and ‘Sell’ recommendations.

Please note these share tips are simply recommendations and are in no way intended as financial advice.  These share tips are general advice and don’t take into account any individual’s financial situation. Investors are advised to seek professional financial advice before investing.

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Harrison Massey, Argonaut

BUY RECOMMENDATIONS

BUY – Cygnus Metals (CY5)

Cygnus recently merged with Canadian-listed copper explorer Dore to form a copper-lithium company with assets in Quebec. The merger includes Dore’s ownership of the Chibougamau copper-gold project, which contains a copper equivalent resource of 10.8 million tonnes at 3.5 per cent. The asset has a large processing facility and contains the only milling infrastructure in a 250 kilometre radius. CY5’s first step out drill hole returned up to 9.1 per cent copper, and there’s significant exploration upside left from here. The shares have risen from 4.3 cents on July 10, 2024, to trade at 12 cents on February 6, 2025.

BUY – Turaco Gold (TCG)

Turaco remains our premier selection for gold explorers in West Africa. The company announced a maiden mineral resource estimate of 2.52 million ounces in July 2024. TCG is likely to release another updated mineral resource estimate towards the end of the third quarter of 2025. Turaco has delivered impressive success with its exploration programs, highlighted by the new Baffia gold discovery announced in January. I own shares in TCG.

HOLD RECOMMENDATIONS

HOLD – Woolworths Group (WOW)

The supermarket group remains a solid defensive play for investors as the current economic climate and cost of living crisis favour consumer staples over consumer discretionary stocks. Anticipated interest rate cuts in 2025 should benefit the supermarket giant as shopper spending confidence gradually returns and potentially lifts grocery sales moving forward.

HOLD – Telstra Group (TLS)

The telecommunications sector remains an attractive defensive play for investors looking to avoid market volatility. Despite Telstra’s lack of operating margin growth, the company remains attractive from a stability and yield perspective, typically paying dividend yields of between 4 per cent and 5 per cent a year on a fully franked basis. TLS is a reliable income stock, but can also potentially deliver capital growth.

SELL RECOMMENDATIONS

SELL – JB Hi-Fi (JBH)

Despite the cost of living crisis, this consumer electronics giant has generated enviable sales growth across its businesses. Investors are betting that retail spending is likely to increase given potential interest rate cuts in 2025. But the stock has outperformed many of its peers in the industry and appears to be overvalued at recent levels. Any marginal reduction in sales is likely to result in a stock sell off, in our view. We think it’s worthwhile taking a profit at recent levels. The shares have risen from $56.14 on February 7, 2024, to trade at $102.81 on February 6, 2025.

SELL – Westpac Banking Corporation (WBC)

Westpac, much like the other big three Australian banks, has benefited immensely from index and superannuation fund buying. Despite Westpac’s share price strength, the bank is trading on unrealistically high price/earnings multiples, in our view. A looming interest rate cut in the Australian economy may subdue any potential upside. Given a strong share price increase in the past year, profit-taking might be prudent. The shares have risen from $24.27 on February 7, 2024, to trade at $33.865 on February 6, 2025.

John Edwards, Novus Capital

BUY RECOMMENDATIONS

BUY – Generation Development Group (GDG)

GDG is a diversified financial services and investment company. Its core businesses are life insurance, investment bonds and financial services. GDG has generated high compound annual earnings growth that’s forecast to continue following a strong second quarter 2025 update, with record investment bonds sales of $250 million. Investors are clearly appreciating the growth and quality of this segment after several years of consistent funds under management growth. A potential catalyst is inclusion in the S&P/ASX 300 at the March 2025 rebalance. Our share price target is $5.50.

BUY – Empire Energy Group (EEG)

EEG is a well funded gas exploration and development company, with onshore assets in the Northern Territory. EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo sub-basin. EEG is poised to begin the last phases of activity on the path to project start-up. The company has successfully cased and cemented the Carpentaria-5H (C-5H) well. In its December quarterly update, EEG reported cash of $25.6 million, with an additional $28.3 million available and undrawn. The company is on track to produce first gas in the late September quarter or early December quarter of 2025 following testing and completion of regulatory approvals. This should provide significant re-rating outcomes and a share price reflecting increasingly de-risked commercial opportunities.

HOLD RECOMMENDATIONS

HOLD – BHP Group (BHP)

The world’s largest miner produces iron ore, metallurgical coal, copper, nickel and potash. The company produced 131 million tonnes of iron ore in the first half of fiscal year 2025, up 1 per cent on the prior corresponding period. Production guidance for full year 2025 remains unchanged at between 255 million and 265.5 million tonnes. Total copper production increased by 10 per cent to 987,000 tonnes. A concern is a large iron ore mine in Guinea may lead to an over-supply of iron ore and subdued prices when it starts producing. Our share price target for BHP is $41.

HOLD – WAM Capital (WAM)

WAM is an investment manager. The company has $5.5 billion in funds under management. It offers a diversified portfolio. The WAM Capital investment portfolio outperformed the S&P All Ordinaries Accumulation Index in December. The dividend yield remains attractive, although partially franked at 60 per cent. The shares have risen from $1.485 on November 6, 2024, to trade at $1.59 on February 6, 2025.

SELL RECOMMENDATIONS

SELL – DroneShield (DRO)

The company provides artificial intelligence based platforms for protection against advanced threats, such as drones and autonomous systems. The shares have fallen from $2.60 on July 15, 2024, to trade at 65 cents on February 6, 2025. We’re concerned about the company’s outlook given US President Donald Trump has committed to ending the war between Russia and Ukraine amid striving to bring sustained peace to the Middle East. First half revenue from continuing operations rose 108 per cent in full year 2024 when compared to the prior corresponding period. But the company’s net loss was up 64 per cent.

SELL – Commonwealth Bank of Australia (CBA)

The CBA is a high quality bank, but it’s not a growth stock, in my opinion. Cash earnings of $9.836 billion in full year 2024 actually fell 2 per cent on the prior corresponding period. Share price upside has surprised many market watchers after rising from $114.55 on February 7, 2024, to trade at $160.81 on February 6, 2025. In our view, the stock is expensive. Investors chasing a good dividend yield should consider taking a profit in CBA before investing the proceeds in higher yielding non-bank stocks. Our price target is $110.

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Damien Nguyen, Morgans

BUY RECOMMENDATIONS

BUY – Megaport (MP1)

Megaport provides network-as-a-service solutions, enabling businesses to connect seamlessly with cloud service providers, such as Amazon Web Services, Microsoft Azure and Google Cloud. The company generated a net profit of $9.6 million in full year 2024, up from a loss of $9.8 million in full year 2023. EBITDA of $57.1 million was up 127 per cent. Revenue of $195.3 million was up 28 per cent. The company is well managed and the outlook is bright. Revenue guidance in fiscal year 2025 is conservative, in our view. We suggest investors consider adding Megaport to their portfolios at these levels.

BUY – Australian Foundation Investment Company (AFI)

AFI is the largest listed investment company on the ASX, with a market capitalisation of about $9.2 billion on February 6. It invests in 60 to 80 ASX listed companies across a range of industries, selected for their ability to perform through economic cycles amid generating attractive returns over the long term. Profit after tax of $154.2 million in the half year ending December 31, 2024, was up 2.7 per cent on the prior corresponding period. AFI was recently trading at a discount to net tangible assets, and we view AFI as an attractive entry point for value investors. It was recently trading on a grossed-up dividend yield above 4.8 per cent.

HOLD RECOMMENDATIONS

HOLD – REA Group (REA)

This multinational digital advertising business specialises in property. The share price has risen from $192.39 on September 25, 2024, to trade at $248.96 on February 6, 2025. Investors have been factoring in higher listing volumes in coming months. The share price responded positively to REA abandoning its pursuit of UK counterpart Rightmove PLC in late September 2024. While we retain a hold recommendation, we acknowledge REA’s strong market position and growth opportunities. We continue to look for a more attractive entry point.

HOLD – Sigma Healthcare (SIG)

On February 3, 2025, Sigma announced the Federal Court of Australia had approved the proposed scheme of arrangement, enabling Sigma to acquire 100 per cent of the issued shares in Chemist Warehouse. Investors reacted positively to the proposed merger, with Sigma’s shares rising strongly in calendar year 2024. New Sigma shares issued under the scheme are expected to start trading on a normal settlement basis on February 13, 2025. In our view, the stock is likely to be added to the S&P/ASX100 index and global indices, which could see passive buying from exchange traded funds. We expect the share price may be volatile in the coming months and suggest existing investors remain patient with the stock.

SELL RECOMMENDATIONS

SELL – Commonwealth Bank of Australia (CBA)

CBA is the highest quality of the big four banks, in our view. The banking sector was a safe haven for investors in 2024. However, in our opinion, CBA’s valuation is excessive relative to other banks. Its valuation is trading significantly higher than historical averages, which raises concerns about whether it can be sustained at such high levels. We suggest investors take profits and look to redeploy their capital in stocks offering more appealing value.

SELL – The Star Entertainment Group (SGR)

The embattled casino operator’s future is unclear as it attempts to find a solution to its financial woes. Second quarter revenue of $299 million in fiscal year 2025 was down 15 per cent on the first quarter. It announced a second quarter EBITDA loss of $8 million, which was an improvement on the EBITDA loss of $18 million in the first quarter. On January 29, 2025, the company announced a divestment of its Star Sydney Event Centre assets subject to conditions. The shares have fallen from 56 cents on February 7, 2024, to trade at 12.2 cents on February 6, 2025. We don’t see a turnaround in the company any time soon.

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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.