Michael Gable, Fairmont Equities
BUY RECOMMENDATIONS
Northern Star Resources (NST)
Chart: Share price over the year

This gold producer remains in a long term uptrend and is ready to head higher after a recent pullback. NST has now made a small three-wave correction on top of a prior high, which is a bullish sign. The shares closed at $7.18 on July 5.
Nanosonics (NAN)
Chart: Share price over the year

The company specialises in preventing infection. NAN peaked in mid 2016 after a huge rally in the prior few years. NAN has spent the past two years consolidating the move. It has finally broken the downtrend on good volume. We expect NAN to resume the prior uptrend and rally strongly to a new high over the next few months. The stock closed at $3.03 on July 5.
HOLD RECOMMENDATIONS
Corporate Travel Management (CTD)
Chart: Share price over the year

With CTD recently heading to a new high, it has become evident to us that CTD has broken a four month ascending triangle. This means that despite the new highs, CTD is likely to rise and any dips present a buying opportunity. The stock finished at $27.57 on July 5.
Freedom Foods Group (FNP)
Chart: Share price over the year

After peaking in April, this food and beverage maker eased back for several weeks. It then found plenty of support on top of the February high, which is a bullish sign. It’s now making new highs again, so we’re confident FNP is resuming the uptrend. The shares closed at $6.42 on July 5.
SELL RECOMMENDATIONS
Breville Group (BRG)
Chart: Share price over the year

This electrical appliances company reported well in February and made a new high of $14.175. It was then sold down by almost 20 per cent and has since struggled to make much headway. We noticed the stock went up to February’s low point, but then started heading south again. In our view, there’s a good chance the stock will retreat to near $10. The shares closed at $11.68 on July 5.
Qantas Airways (QAN)
Chart: Share price over the year

We’ve been impressed by the stellar run, but it now appears the share price is under pressure. It recently moved to a new high, but then was sold down, erasing several weeks of gains in just a few days. In our view, this is a negative sign and we expect the share price to now come back towards support near $5.50. The shares closed at $6.37 on July 5.
Jonathon Howe, Red Leaf Securities
BUY RECOMMENDATIONS
Dropsuite (DSE)
Chart: Share price over the year

Dropsuite is a cloud based security company that backs up email and websites for its customers. The company exceeded 300,000 users last month. The stock has soared since hitting a low in May, but we believe the shares can go higher as further users are added and potentially more partnerships are announced with domain registrars and web hosting companies. The shares were trading at 12 cents on July 5. I own shares in DSE. Transaction Solutions International (TSN)
Chart: Share price over the year

The company announced a 57 per cent increase in the value of its holding in TSI India to $15.34 million. The company also owns 100 per cent of Decipher Works (DWX), a cyber security services business with annualised profit of $1 million. TSN reported $1.49 million in cash at the end of March. It has no debt. Several catalysts for a re-rating include a revenue increase from DWX, bolt-on acquisitions and a potential divestment of TSI India. The shares were trading at less than a cent on July 5. I own shares in TSN. HOLD RECOMMENDATIONS
Telstra (TLS)
Chart: Share price over the year

Telstra has been a serial underperformer, with multiple headwinds and downgrades in the past 12 months. The shares have bounced off their June 29 low of $2.60 to trade at $2.765 on July 5. In our view, The 5G rollout will be a catalyst for a re-rating. Commonwealth Bank (CBA)
Chart: Share price over the year

The bank recently bounced off two year lows. The company clearly has work to do in terms of divestment and cleaning up its image in light of the Banking Royal Commission. However, we believe it’s an opportune time to be invested in CBA. In our opinion, it’s the best bank on the ASX. SELL RECOMMENDATIONS
Qantas Airways (QAN)
Chart: Share price over the year

The company has enjoyed a great run since 2014, with most of the success attributed to its frequent flyers program and innovative technology. But with a market capitalisation of $10.51 billion on July 5, now might be the time to consider taking some profits. The shares were trading at $6.38 on July 5. Flight Centre (FLT)
Chart: Share price over the year

This travel agency has gone against the grain in terms of bricks and mortar travel bookings, with consistent growth in its domestic and international operations. Over the years, the company has also made numerous growth acquisitions, bolstering up total transaction value and revenue. The shares have risen from $43.44 on January 10 this year to trade at $61.46 on July 5. Consider banking profits at these levels.
Adam Spicer, Baillieu Holst
BUY RECOMMENDATIONS
Silver Lake Resources (SLR)
Chart: Share price over the year

SLR is capped above $300 million, has no debt and is producing strong quarterly gold sales. After factoring in higher production for fiscal year 2018 and recent cost performance, we have increased our earnings forecasts by 17 per cent. SLR looks cheap relative to other gold companies. EQT Holdings (EQT)
Chart: Share price over the year

EQT is the holding company for Equity Trustees. EQT has struggled to generate top line revenue and earnings growth in the past two years. We believe three recent strategic initiatives (the OneVue RE acquisition, the UK acquisition and the Aon Super Trustee win) should be earnings per share accretive in fiscal years 2018 and 2019. On our forecasts, EQT offers good value, with the stock recently trading on a prospective fiscal year 2018 price/earnings multiple of 18.1 times, generating a two-year earnings per share compound annual growth rate of 16 per cent and a fully franked dividend yield of 4.1 per cent.
HOLD RECOMMENDATIONS
Macquarie Group (MQG)
Chart: Share price over the year

This global diversified financial group reported a strong fiscal year 2018 result, with return on equity increasing and pre-tax operating margins expanding about 32 per cent. MQG offers investors a good blend of earnings and dividend growth compared to the big four banks. The stock was recently trading on a prospective fiscal year 2019 price/earnings multiple of 14.2 times, which isn’t excessive for a company that generates about 70 per cent of its revenue from annuity style business. Insurance Australia Group (IAG)
Chart: Share price over the year

IAG announced the sale of its operations in Thailand, Indonesia and Vietnam. Consequently, we’re forecasting a $320 million share buyback at the next result and a further $300 million special dividend in fiscal year 2019. At current prices, we believe IAG is a hold. We believe the next leg up for the share price will come from its cost out program and capital management initiatives, which could lead to upgrades of about 20 per cent in consensus earnings per share forecasts. SELL RECOMMENDATIONS
WiseTech Global (WTC)
Chart: Share price over the year

This cloud based software solutions company is a high quality, high margin business, with a significant addressable market. However, the extreme disconnect between the current share price and our $7.50 valuation is too great. Consider selling on valuation. The shares were trading at $16.25 on July 5. WorleyParsons (WOR)
Chart: Share price over the year

This engineering group remains highly leveraged to oil prices and sector capital spending. Based on the current share price, we believe the cyclical recovery is already priced in. WOR was recently trading on 25 times forecast fiscal year 2018 earnings and 23 times forecast fiscal year 2019 earnings. It might be prudent to sell based on valuation grounds. The shares were trading at $18.01 on July 5.

 

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