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Simon Herrmann, wise-owl.com
BUY RECOMMENDATIONS
Freelancer (FLN)
Chart: Share price over the year
Operates the world’s largest freelancing, outsourcing and crowd sourcing market as well as payments company Escrow.com. Management has a strong track record of creating value and we’re attracted to the company’s growth trajectory, eco system and balance sheet. Following a period of stagnation and share price volatility, the recent results suggest renewed growth momentum and a return to the company’s long term growth trend. We see strong growth potential and upgrade to a buy.
Enero Group (EGG)
Chart: Share price over the year
Focuses on integrated marketing and corporate communication services, including strategy, market research and advertising. It’s generating growth across all key metrics in its markets. We expect the trend to continue via a mix of organic growth and acquisitions. This trend is a major catalyst behind our recommendation.
HOLD RECOMMENDATIONS
Crowd Media Holdings (CM8)
Chart: Share price over the year
This software company has made progress investing in growth opportunities and reducing its cost base, resulting in a leaner business with increased operational leverage. Recently completed debt re-financing provides financial flexibility, while a strategic review is expected to deliver about $3.5 million in annualised cost savings. As the company’s funding position improves, attention will now return to top line growth and profitability. The shares closed at 2.1 cents on July 25.
Newcrest Mining (NCM)
Chart: Share price over the year
The gold miner has outperformed major peers during the past five years following a successful turnaround that started in 2013. The turnaround was driven by significant operational improvements at the Lihir mine, a reduction in debt and value added acquisitions that enhanced the company’s asset portfolio. It’s one of the world’s lowest cost major gold producers. Newcrest’s assets have the potential to generate ongoing free cash flow and further growth, organically and through acquisitions.
SELL RECOMMENDATIONS
Cimic Group (CIM)
Chart: Share price over the year
In our view, recent half year results for this engineering-led construction and mining company fell short of expectations, with investors punishing the share price. The company is sensitive to the cyclical nature of its business. We believe there are better and more robust opportunities available at this point. The shares have fallen from $45.27 on July 16 to finish at $35.98 on July 25.
South32 (S32)
Chart: Share price over the year
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The manganese ore miner has struggled this calendar year, and a mixed outlook for the global economy could trigger volatility in commodities markets. We also believe the company fell short of expectations on its cost structure regarding several crucial operations. We downgrade to sell.
Michael Kodari, KOSEC
BUY RECOMMENDATIONS
Dacian Gold (DCN)
Chart: Share price over the year
The shares were slashed in early June following a revision of guidance for its Mt Morgans gold mine. The shares fell from a $1.585 on May 31 to 51.5 cents on June 5. We saw a potential buying opportunity, given positive momentum in the gold price. The stock has partially recovered following revised production guidelines and a promising life-of-mine plan. The shares were trading at $1.08 on July 25. There may be more upside for those willing to take risk.
PolyNovo (PNV)
Chart: Share price over the year
A fundamentally strong medical device company complemented by positive liquidity ratios and supported by strong cash reserves. These fundamentals have been supported by robust sales. PNV generated more than $1 million in revenue in both April and May. Also, PNV has been granted access to US Department of Defence contracts. This could potentially offer a significant opportunity for its NovoSorb BTM (biodegradable temporising matrix) wound care product to be implemented into a large network of military health care facilities in the US and globally.
HOLD RECOMMENDATIONS
Nearmap (NEA)
Chart: Share price over the year
The share price of this aerial imagery company has risen from $1.545 on July 24, 2018 to trade at $3.25 precisely a year later. It expects fiscal year 2019 to post record growth in annualised contract value, subject to a final audit. The company’s preliminary results, released on July 12, may have been below market expectations, as the shares were priced at $3.69 on July 11. The shares were trading at $3.345 on July 25.
Service Stream (SSM)
Chart: Share price over the year
Provides network services to the telecommunications, energy and water industries. Its half year report showed an improving performance in all operating divisions compared to the previous corresponding period. Its strong financial position, highlighted by cash flows and contract wins earlier this year, has seen the stock rise from $1.745 on January 2 to trade at $2.925 on July 25.
SELL RECOMMENDATIONS
Whitehaven Coal (WHC)
Chart: Share price over the year
The stock continues its downtrend. Thermal coal prices have fallen in response to weaker demand in Europe and subsequent dumping in Asian markets due to global oversupply. This, combined with a cut in guidance earlier this year has seen the share price fall from $4.867 on February 7 to trade at $3.77 on July 25.
Syrah Resources (SYR)
Chart: Share price over the year
Syrah was recently the most shorted stock on the ASX, with a short interest of 19.3 per cent. A recently quarterly update revealed weaker than expected production and a further decline in its pricing. Currently, it costs more to produce graphite than it receives from customers. The shares have fallen from a 52 week high of $3.057 on July 27 last year to trade at 98 cents on July 25, 2019.
Tony Locantro, Alto Capital
BUY RECOMMENDATIONS
Strandline Resources (STA)
Chart: Share price over the year
This emerging mineral sands company has major projects in Tanzania and Western Australia. The Coburn project in WA is a world class, long life project with a definitive feasibility study completed in April 2019. The financing process is underway. The Fungoni high margin project in Tanzania is ready for construction. Strandline offers speculative upside as production milestones are met.
Minotaur Exploration (MEP)
Chart: Share price over the year
Results at the Jericho copper project in Queensland continue to impress, as MEP moves towards an initial resource in a joint venture with major resource company Oz Minerals. Oz has the right to earn 80 per cent from the project, loan-carrying MEP through to production. In South Australia, MEP’s partner Andromeda Metals is fast tracking the kaolin/halloysite project, and MEP has the right to earn 25 per cent of cash flow going forward. In my view, upside potential exists for those willing to take risk. The shares were trading at 4.8 cents on July 26.
HOLD RECOMMENDATIONS
Stavely Minerals (SVY)
Chart: Share price over the year
The Victorian copper porphyry hunt continues into its fifth year, with SVY currently drilling a key hole into the target area. A discovery would be significant, but has proven elusive so far. The company is supported by a high grade gold resource with exploration potential in Tasmania. This stock is one to watch in coming weeks for progress on the important drill hole.
PharmAust (PAA)
Chart: Share price over the year
This clinical stage oncology company has received ethics approval to use its drug monepantel to treat dogs with cancer in phase II trials. Monepantel showed positive signs in phase I trials. Recruitment of dogs will commence soon. The phase II trial is expected to start in August or September. It aims to treat dogs with B-cell lymphoma – the most prevalent canine cancer.
SELL RECOMMENDATIONS
Fortescue Metals Group (FMG)
Chart: Share price over the year
With the iron ore price moving above $US100 a tonne, FMG has been one of the strongest performers on the ASX and now provides an opportunity to lock in profits. The iron ore price has surged this year on the back of supply disruptions, particularly in Brazil. Any increase in global supply could negatively impact the iron ore price. In my view, risk outweighs reward for FMG at this point.
Afterpay Touch Group (APT)
Chart: Share price over the year
The share price of this buy now, pay later company continues to defy gravity despite emerging competition from the likes of Mastercard and Visa. The stock has risen from $11.98 on January 3 to trade at $25.73 on July 26. In my view, the stock appears to be priced for perfection, with risks to the downside.
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.
