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Friday 30

June, 2017 1:54 AM



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18 Share Tips - 13 March 2017

18 Share Tips - 13 March 2017

By Anthony Black 13.03.2017



Jeremy Hook, TMS Capital

 

BUY RECOMMENDATIONS

 

Boral (BLD)   

Chart: Share price over the year

This building products company is benefiting from strong local infrastructure spending and exposure to the Trump-led US economic enthusiasm that should result in good short to medium term earnings growth. We regard CEO Mike Kane highly and expect the stock to move towards $6.50 this year before further moves. The shares were trading at $5.98 on March 9.

 

Healthscope (HSO)

Chart: Share price over the year

A leading private healthcare provider in Australia with 45 hospitals and 48 medical clinics. A good performer since listing in July 2014. Hospitals operating EBITDA was up 2.2 per cent to $186.7 million for the six months ending December 31, 2016. We believe HSO offers value at current levels. The shares were trading at $2.235 on March 9.

 

HOLD RECOMMENDATIONS

 

Wesfarmers (WES)

Chart: Share price over the year

Delivered increases in key financials for the half year ending December 31, 2016. Operating revenue was up 4.3 per cent on the prior corresponding period to $34.917 billion. Net profit after tax rose 13.2 per cent to $1.577 billion. With a strong balance sheet and a healthy and rising 7 per cent grossed up dividend yield, WES will enhance portfolio income and perform solidly in the period ahead.

 

Challenger (CGF)

Chart: Share price over the year

Challenger has been an outstanding performer in the past two years, and reported solidly in February. Total group assets under management for the first half were up 12 per cent on the prior corresponding period to $64.7 billion. It achieved record annuity sales of $2.2 billion. We think it’s the best placed diversified financial that will continue to grow. But after recent strength, we regard it as a hold.

 

 

SELL RECOMMENDATIONS

 

QBE Insurance (QBE)

Chart: Share price over the year

QBE has improved in recent months, largely on what we believe is the reflation trade following the US presidential election. But we believe this has been overstated in the share price reaction. The shares were priced at $9.30 on November 9, 2016. QBE was trading at $12.64 on March 9, 2017.

 

Stockland (SGP) 

Chart: Share price over the year

In our view, this is about as good as it gets for this diversified property group. First half 2017 statutory profit grew by just 0.7 per cent on the prior corresponding period. We believe SGP looks fully valued. Long term holders know this is a cyclical stock. We believe it’s trading on a stretched multiple and a below average yield, so now is the time to sell.

 


Darren Jackson, Sanlam Private Wealth

 

BUY RECOMMENDATIONS

 

Berkut Minerals (BMT)

Chart: Share price over the year

In September 2016, we recommended Berkut in this column for its strong management team, balance sheet and gold assets. It has an option to acquire European cobalt assets, and is undertaking due diligence. Consequently, we like the stock even more. In our view, the company is undervalued. The cobalt projects look promising. The shares were trading at 29.5 cents on March 8.

 

Zenitas Healthcare (ZNT)

Chart: Share price over the year

Provides home care and primary care solutions. Long term upside exists from ZNT potentially making acquisitions in the heavily fragmented allied health care space. An aging population provides an additional strong tailwind.

 

HOLD RECOMMENDATIONS

 

Sky and Space Global (SAS)

Chart: Share price over the year

The share price of this technology firm has more than doubled since our buy recommendation here at 8.4 cents on January 30. We continue to hold. SAS plans to launch three commercial nano-satellites by May to provide global communication infrastructure and services to the telecommunications industry. We expect the stock to continue re-rating. The shares were trading at 18.5 cents on March 8.

 

 

Mayfield Childcare (MFD)

Chart: Share price over the year

The childcare provider listed on November 30, 2016. It’s enjoyed a nice run since we recommended it as a buy here on January 30. It recently reported and beat prospectus forecasts. Revenue was up 12.5 per cent. Operational EBITDA jumped 7.7 per cent and net profit after tax was up 19.4 per cent. Risk adjusted, the stock still looks attractive relative to its peers.   

 

SELL RECOMMENDATIONS

 

MYOB Group (MYO)

Chart: Share price over the year

The accounting software provider is up against fierce competition in this space. Private equity group Bain Capital remains a substantial shareholder after recently selling a sizeable stake, but we anticipate another block trade at a discount in the medium term. Our preferred choice in this space is Xero.

 

Slater & Gordon (SGH)

Chart: Share price over the year

A first half loss of $425.1 million paints a dire outlook for this troubled law firm. Debt levels are too high and its future is unclear. Debts exceed total assets.  SGH is also the subject of a shareholder class action. It was trading at 8.6 cents on March 8.

 


Jonathon Howe, Red Leaf Securities

 

BUY RECOMMENDATIONS

 

Huon Aquaculture Group (HUO)

Chart: Share price over the year

One of the better stocks to own in this space.  The salmon producer has posted a huge turnaround in its net profit after tax for the six months ending December 31, 2016. It reported a NPAT of $31.5 million compared to a loss of $1.3 million on the prior corresponding period. We believe this stock is a potential candidate for the S&P/ASX 300 Index if the register is opened to more liquidity. Red Leaf has been accumulating HUO for clients in the past few months.

 

Automotive Solutions Group (4WD)

Chart: Share price over the year

This 4-wheel drive accessories company completed an IPO at $ 1 a share before listing on December 21, 2016.

The shares were trading at 93 cents on March 8. We believe the company will benefit from providing outlook commentary and updates going forward. Red Leaf participated in the IPO at $1 and has been buyers of the stock.

 

 

HOLD RECOMMENDATIONS

 

Telstra (TLS)

Chart: Share price over the year

Generates a nice steady yield, and the reason we continue to hold TLS for large portfolios. The share price has retreated almost 30 per cent since its $6.50 highs in mid 2015, which we believe is overdone. We continue to accumulate at these levels. The shares were trading at $4.66 on March 8.

 

BetaShares Australian Dividend Harvester Fund (HVST)

Chart: Share price over the year

Another yield play that invests in the top 20 ASX listed stocks, while hedging positions with options to pay an annual yield of about 10 per cent.  A steady monthly income stream is behind our recommendation.

 

 

SELL RECOMMENDATIONS

 

Slater & Gordon (SGH)

Chart: Share price over the year

The share price of this embattled law firm closed at 8.8 cents on March 8. It carries too much debt and the clock is ticking on an uncertain future. It posted a first half loss of $425.1 million.

 

The A2 Milk Company (A2M)

Chart: Share price over the year

While A2M continues to do well, we’re concerned about potentially tighter Chinese restrictions on imports of dairy and infant formula products. It may be prudent to reduce holdings.

 

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. 


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