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October, 201712:33 AM



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18 Share Tips - 20 March 2017

18 Share Tips - 20 March 2017

By Anthony Black 20.03.2017



Michael Gable, Fairmont Equities

 

BUY RECOMMENDATIONS

 

South32 (S32)

Chart: Share price over the year

This global diversified metals and mining company peaked at $3 levels in December last year after rallying strongly from below $1 about a year earlier. Since December, it’s been correcting back, forming a flag against the overall uptrend. The stock is now breaking out of that flag on strong volume in order to resume the uptrend. We would look for a retest near the $2.70 resistance line for an entry point, but run a tight stop. If S32 resumes the uptrend here, then we would be looking at targets back above $3. The shares closed at $2.75 on March 16.

 

Lendlease Group (LLC)

Chart: Share price over the year

LLC finally broke out from an ascending triangle that had been forming for the past year, where resistance was just below $15. It’s also retested and held that prior resistance level, which is a bullish sign. It should now enter a new trading range, where the upper limit should be near $17. We wouldn’t want to see LLC dip below support near the $14.60 zone. The share price of this property and infrastructure company closed at $15.62 on March 16.

 

HOLD RECOMMENDATIONS 

 

Fairfax Media (FXJ)

Chart: Share price over the year

The media giant is looking neutral for now, but that can turn positive very quickly. The stock has been trading in a large rectangle for almost three years. Because it’s been doing that for so long, it will rally strongly when it breaks out. But it’s too early to jump on board. If we see FXJ break out near $1.05, then it should swiftly head towards resistance near $1.35. Until then, it’s still range bound, but one worth watching. The shares closed at $1.02 on March 16.

 

The Star Entertainment Group (SGR)

Chart: Share price over the year

SGR appears to have completed the downside move from its peak in August last year by falling in five waves to a low in February. It should stage a recovery from here, so it’s worth holding. But we can see resistance levels nearby at $5.30 and then further up near $5.60 where profit taking may emerge. The shares closed at $5.27 on March 16.

 

SELL RECOMMENDATIONS 

 

Freelancer (FLN)

Chart: Share price over the year

Freelancer listed in November 2013, so we can start to read a bit more into how it’s trading. It’s shed about half its value in the past 18 months. The latest rally a couple of weeks ago saw it turn at the previous swing low near $1. This implies more pain is in store for FLN shareholders, as we expect the price is likely to fall to a new low for the year, near support at 70 cents. The shares closed at 91.5 cents on March 16. 

 

BHP BILLITON (BHP)

Chart: Share price over the year

The global miner peaked near $28 in January 2017 before coming back for a couple of weeks. It tried to rally again, but could only get near $27 before it was sold off a few weeks ago on heavy volume. For the moment, it seems like the risk is to the downside. If we get a 3-wave decline (an a-b-c correction) where wave “c” equals 1.6 times wave “a”, then BHP will dip below $23. This level would also equal the 38.2 per cent retracement of the rally that started in January 2016. So we would expect BHP to fall into that support zone before re-assessing. The shares closed at $25.12 on March 16.

 


Peter Moran, Wilsons

 

BUY RECOMMENDATIONS

 

Zenitas Healthcare (ZNT) 

Chart: Share price over the year

This community based healthcare organisation provides home care services and operates general practice medical centres. We expect ZNT will grow through increasing demand for its allied health care offering and through its home care service as the Federal Government rolls out the National Disability Insurance Scheme. The stock is cheap on a multiple basis and acquisitions have the potential to materially lift earnings for the group.

 

SomnoMed (SOM)

Chart: Share price over the year

SOM’s traditional medical device business continues to expand, as more physicians, patients and their health insurers choose oral appliance therapy to treat obstructive sleep apnea. SOM is growing its sleep treatment centre network. We expect this will further accelerate market share by targeting millions of untreated patients in the US unable to tolerate the alternative sleep apnea treatment involving continuous positive airway pressure.

 

 

HOLD RECOMMENDATIONS

 

Telstra (TLS)

Chart: Share price over the year

Telstra’s recent result was disappointing with earnings and cash flow below market expectations. Stiffer competition impacted much of the business. The dividend yield is attractive, but we see limited upside from here. With the shares trading close to our $4.79 price target, we retain a hold recommendation. The shares were trading at $4.75 on March 16.

 

Coca-Cola Amatil (CCL)

Chart: Share price over the year

The beverage giant has reduced costs and expects further cuts from re-modelling its supply chain. CCL will buy back $350 million of shares on market from late March. We see the shares as fairly priced around current levels and retain a hold recommendation. The shares were trading at $10.35 on March 16.

 

SELL RECOMMENDATIONS

 

InvoCare (IVC)

Chart: Share price over the year

Operating earnings after tax were up 11.9 per cent on the prior corresponding period to $55.233 million for the year ending December 31, 2016.  This funeral, cemetery and cremation operator has attractive and defensive characteristics. But the stock was recently trading on a price/earnings ratio of 26 times, which we believe is too expensive on our forecasts of modest earnings growth. Sell at these prices. The shares were trading at $14.15 on March 16.

 

Seven West Media (SWM)

Chart: Share price over the year

Underlying net profit after tax fell to $95.7 million for the half year ending in December 2016 compared to $140.3 million in the prior corresponding period. The interim dividend was cut by 50 per cent to 2 cents. By cutting costs, SWM believes it can keep the fall in underlying full year EBIT to about 20 per cent. Better opportunities elsewhere. 

 


Peter Russell, Russell Research

 

BUY RECOMMENDATIONS

 

AMA Group (AMA)  

Chart: Share price over the year

An Australian leader in the automotive aftercare and accessories market. A serial consolidator of panel repair operations, it’s growing rapidly via well targeted acquisitions and the trend is set to continue. AMA has a culture of operating excellence and employee involvement. It offers a strong balance sheet and generates lots of cash. We expect earnings per share and its franked dividend to rapidly increase going forward.

 

EML Payments (EML)

Chart: Share price over the year

The renamed eMerchants provides pre-paid financial card products and services across Australia, Europe and North America. We’re expecting revenues to June 2017 to be 10 times higher than three years ago. We’re expecting earnings per share of 3 cents this year to more than double next year. With the base built, the ride is starting.

 

HOLD RECOMMENDATIONS

 

Blue Sky Alternative Investments (BLA)

Chart: Share price over the year

Manages the fast growing alternative assets class – less correlated with equities or debt – but via unlisted long term funds across private equity, venture capital, real estate, water and agribusiness. Fee earning assets under management were $2.7 billion at December 31, 2016, with a target of $5 billion in 2019. We expect a 2.9 per cent franked yield to rise rapidly as BLA follows the lead of US exemplars. Watch and add.

 

Corporate Travel Management  (CTD)

Chart: Share price over the year

CTD has grown from an Australian to a global corporate travel specialist and is now in 53 countries. It offers highly disciplined acquisition selection, financing and integration. It’s extremely client focused, with its own online client booking and planning systems. Keep adding.

 

SELL RECOMMENDATIONS

 

CIMIC Group (CIM)

Chart: Share price over the year

CIM is a world leading international contractor and the largest contract miner. The re-born Leighton, under Spanish control, has been showing strong form. The 2016 result included a 14.9 per cent rise in earnings per share, a buy-back and the acquisitions of UGL and others. Work in hand is strong. However, the share price has risen more than 70 per cent in two years. Now sliding, it remains highly priced. Look to lighten.

 

Downer EDI  (DOW)

Chart: Share price over the year

Downer is a leader across diverse markets. Mining contributed a quarter of first half 2017 EBIT.  Transport was close behind, then construction and maintenance, technologies and communication, utilities and rail. Downer’s share price has doubled in 12 months. It looks priced for perfection as we expect low earnings growth. Lighten.

 

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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