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18 Share Tips - 15 May 2017

18 Share Tips - 15 May 2017

By Anthony Black 15.05.2017



Ryan Gale, PAC Partners

 

BUY RECOMMENDATIONS

 

Murray River Organics Group (MRG)


Chart: Share price over the year

The organic food maker downgraded prospectus fiscal year 2017 EBITDA forecasts from $15.9 million to $13 million due to project delays and a lower yield. MRG used a tough season to buy an adjoining 7764 acres (96 per cent bare) for $7.5 million, with $2 million of EBITDA. In our view, investors over-reacted to the earnings downgrade, as we believe MRG is now set for steady internal growth.

 

Investigator Resources (IVR)

Chart: Share price over the year

IVR has announced an upgrade to its silver resource at the Paris deposit in South Australia. In mining terms, grade is king, and IVR has been able to deliver a significant increase in the silver grade. The resource upgrade will be included in the Paris pre-feasibility study. The results demonstrate the potential to undertake more infill drilling and expand the high grade component, providing IVR with significant blue sky potential. A speculative buy.

 

HOLD RECOMMENDATIONS

 

Celsius Resources (CLA)

Chart: Share price over the year

The cobalt developer embarked on an exploration program in March 2017 to drill the largely covered sections of the cobalt horizon at its Opuwo project in southern Africa. So far, the drilling results have been encouraging. The asset has the requisite grade and scale to proceed with economic development.

 

Antara Lifesciences (ANR)

Chart: Share price over the year

The company is developing non-antibiotic treatments for gastrointestinal diseases in animals and humans. Its lead product Detach has shown to be effective in treating diarrhoea, known as scour, in pigs. Commercial sales may begin next year if it meets regulatory approvals.

 

SELL RECOMMENDATIONS


Bendigo and Adelaide Bank (BEN)

Chart: Share price over the year

The lending sector has experienced recent spikes in volatility. In my view, BEN’s shares are over valued and other banks are performing better. On January 16, 2017, the shares were priced at  $13.11. The shares were trading at $12.37 on May 11. 

 

Metcash (MTS)

Chart: Share price over the year

The shares have enjoyed a solid increase in the past year. The supermarket wholesaler, which manages the IGA brand, needs to keep cutting prices if it wants to defend its market share against competitors. An Amazon in Australia will take grocery market share. The question is how much?  In my view, Amazon will have a bigger impact on MTS compared to the other supermarket majors. 

 


Jonathon Howe, Red Leaf Securities

 

BUY RECOMMENDATIONS

 

EVE Investments (EVE)

Chart: Share price over the year

This technology investment company recently raised capital to acquire 50 per cent of Jenbrook, a certified organic tea farm in New South Wales with key revenue lines. Research and development is underway to potentially develop cannabis honey. We believe the company has the expertise to secure further agreements in this space. Red Leaf Securities was the lead manager in the capital raising and I own shares. A speculative buy.

 

Cre8tek (CR8)

Chart: Share price over the year

The company is trialing cutting edge artificial intelligence that will enable consumers to buy insurance products online without the need for human interaction. This company is on the cusp of proving its technology to major players, including Nationwide and Metlife, which have already signed onto its platform for paid trials. I own shares in CR8.

 

HOLD RECOMMENDATIONS

 

OneVue Holdings (OVH)

Chart: Share price over the year

This superannuation solutions provider should benefit from Federal Government budget measures that enable first home buyers to save for a deposit by salary sacrificing up to an additional $30,000 into their super fund from July 1. Also, homeowners who are over the age of 65 and downsizing can make a non-concessional contribution of up to $300,000 into their super fund from the proceeds of the sale. 

 

 

Telstra (TLS)

Chart: Share price over the year

We expect volatility to return to financial markets in the next few months in response to heightened global uncertainty, such as North Korean tensions. So a company like Telstra is worth holding as it’s a defensive investment with a dividend to be announced in August.

 

SELL RECOMMENDATIONS

 

The A2 Milk Company (A2M)

Chart: Share price over the year

The stock is trading at a substantial premium to our valuation, so we believe now is a good time to take profits. We retain our long term concerns about potentially tighter Chinese restrictions on imports of dairy and infant formula products. 

 

Quintis (QIN)

Chart: Share price over the year

The company owns commercial Indian sandalwood plantations. After recently losing a major contract to supply East Indian sandalwood oil, we believe this company faces challenges going forward. 

 


Mathan Somasundaram, Blue Ocean Equities

 

BUY RECOMMENDATIONS

 

Altium (ALU)

Chart: Share price over the year

We expect this technology stock to deliver double digit earnings per share growth for the next five years. The company operates in a growth area with limited competitors. ALU continues to trade at a discount to domestic and global peers. Our analyst Gregg Taylor has a price target of $10.50. The shares were trading at $8.735 on May 10.

 

Australian Agricultural Company (AAC)

Chart: Share price over the year

A vertically integrated beef business with an outlook for global expansion to take advantage of rising Asian middle class demands. Our analysts Gregg Taylor and Neon Shariful have a price target of $2.46. The shares were trading at $1.78 on May 10.

 

HOLD RECOMMENDATIONS

 

South 32 (S32)

Chart: Share price over the year

In our view, S32 remains the best diversified resource stock. Its strong balance sheet enables it to take advantage of any merger and acquisition opportunities. We expect solid demand for resources in the medium to long term.

 

Ramsay Health Care (RHC)

Chart: Share price over the year

The global private hospital operator should benefit from a weaker Australian dollar. We see RHC as a global growth story given an ageing population and government budget cuts.

 

SELL RECOMMENDATIONS

 

Mirvac (MGR)

Chart: Share price over the year

We retain a negative view on high density residential housing in an environment of rising under employment, declining disposable income and property bubble concerns. Our outlook for apartments in 2017 points to an over-supply. In our view, rising interest rates and tighter lending regulations could hurt Mirvac’s growth.

 

JB Hi-Fi (JBH)

Chart: Share price over the year

We expect the competition to get tougher in the discretionary retail sector. Consumers dealing with higher costs of living are more careful about what they spend their money on. Rising interest rates and Amazon’s expected entry into the Australian market are key potential risk catalysts for JBH in 2017.

 

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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