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Thursday 14

December, 2017 3:09 PM



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18 Share Tips - 16 October 2017

18 Share Tips - 16 October 2017

By Anthony Black 16.10.2017



Michael Gable, Fairmont Equities

 

BUY RECOMMENDATIONS

 

Pro Medicus (PME)

Chart: Share price over the year

After peaking in August 2016, a period of consolidation followed against the prior uptrend. This medical imaging company has finally broken out of this consolidation on good volume. We expect PME to resume the uptrend and head to new highs very soon. The shares were trading at $6.08 on October 12.

 

Western Areas (WSA)

Chart: Share price over the year
 

Price action suggests the nickel producer is now breaking above a three year downtrend line. If it can hold these levels, we could see a significant move higher, not too dissimilar to what we’ve seen with other mid tier resource stocks in the past year. The charts indicate a potential rally from here towards $6. The shares were trading at $2.99 on October 12.

 

HOLD RECOMMENDATIONS

 

BHP Billiton (BHP)

Chart: Share price over the year
 

The global miner last month approached the January high and then stopped short. That’s a good sign if you’re bullish on BHP. What we want to see is BHP consolidate here and wash out the sellers taking profits at these levels. Once that’s done, BHP could be ready to break through $28 and head into the $30 levels. The stock was trading at $26.165 on October 12.

 

Newcrest Mining (NCM)

Chart: Share price over the year
 

At the moment, this gold stock is trading in a symmetrical triangle. This triangle is also sitting on top of the previous resistance point near $15, which is a good sign. The shares could potentially break either way, so it’s a hold for now. But we would be eyeing a break to the upside, through $24 to $25. If that happens, then it may rally up towards $35. The shares were trading at $21.78 on October 12.

 

SELL RECOMMENDATIONS

 

Metcash (MTS) 

Chart: Share price over the year
 

This wholesale distribution and marketing company spent a few weeks in September testing the $2.80 level before it was sold down on increased volume. This appears like classic reversal behavior, and we believe MTS is going to trade lower from here. There is some trend line support near $2.20, and then our next target of support is close to $1.90. The shares were trading at $2.505 on October 12.

 

Qube Holdings (QUB)

Chart: Share price over the year
 

After jumping higher on the day of August results, this diversified logistics and infrastructure company was then heavily sold down. It shows the stock was overvalued. We expect QUB to head lower in the short term, with support coming in around $2.25. The shares were trading at $2.495 on October 12.

 


Peter Moran, Wilsons

 

BUY RECOMMENDATIONS

 

Ridley Corporation (RIC)

Chart: Share price over the year

 

RIC is a leading supplier of premium quality animal food. Sustained growth in poultry and pigs, a recovery in dairy and supplements and contributions from new feed mills should deliver about 13 per cent EBIT growth a year over the next few years. Novacq, a prawn feed additive currently under development, offers significant potential upside.

 

Eclipx Group (ECX)

Chart: Share price over the year
 

This fleet leasing and salary packaging company is on track for a strong fiscal year 2017, with growth across all divisions combined with good cost discipline. The recent acquisition of Grays eCommerce is going well. Loss making consumer categories have been closed and a substantial cost saving program has been completed.

 

HOLD RECOMMENDATIONS

 

Origin Energy (ORG)

Chart: Share price over the year
 

Origin Energy has announced the sale of its Lattice Energy subsidiary to Beach Energy for $1.585 billion. The proceeds will be used to reduce debt. We see the shares as fair value.

 

Spark Infrastructure Group (SKI)

Chart: Share price over the year
 

A specialist infrastructure fund. Its objective is to invest in regulated utility infrastructure in Australia and overseas. Prices are subject to regulation and we see little room for increases in this already high environment. SKI offers an attractive distribution yield of 6 per cent. In an environment of rising bond yields, we have reduced our recommendation from a buy to a hold.

 

SELL RECOMMENDATIONS

 

Computershare (CPU)

Chart: Share price over the year
 

Mortgage servicing, which is the administration of mortgage payments, has become an increasingly important to Computershare. We have reviewed this business and believe it may not provide the operating leverage hoped for by Computershare. As such, we believe growth expectations priced into CPU are too onerous.

 

Reliance Worldwide Corporation (RWC)

Chart: Share price over the year
 

This plumbing products company provides exposure to the US housing recovery, but is too expensive at current prices, in our view. The recent share price values RWC at about 27 times 2018 earnings, 50 per cent above international peers. 



Harrison Watt, Shaw and Partners

BUY RECOMMENDATIONS

Oil Search (OSH)

Chart: Share price over the year


Oil Search has begun its move higher, but expect more to play out as we believe the low cost oil and gas producer is fundamentally undervalued. It’s also a good proxy for taking advantage of forecasted increases in global growth.


Aristocrat Leisure (ALL) 

Chart: Share price over the year


The gaming machine company has begun its next phase of expansion as it aims to gain more market share in the US. It’s a good growth story, and, along with a currency tailwind, ALL should go higher for longer.
 

HOLD RECOMMENDATIONS

Nick Scali (NCK) 
Chart: Share price over the year

Retailers have been under pressure recently and NCK is no exception. With technical support at $5.80, the furniture retailer is a hold and watch. It’s hard to put a sell on NCK as it’s consistently under promised and over delivered. The shares were trading at $6.10 on October 13.
 
MyState (MYS)

Chart: Share price over the year

 
A national diversified financial services group headquartered in Tasmania. Margins are expected to increase with higher interest rates. But it still has a lot of work ahead to gain market share and drive growth.


SELL RECOMMENDATIONS

 
Transurban (TCL)

Chart: Share price over the year


Technically, the toll road operator has begun a downtrend and my next target is below $10. I believe the market has underestimated the pace at which interests rates will rise. I’m on the sidelines for now.

oOh! Media (OML)

Chart: Share price over the year

 
This outdoor advertising company has outperformed competitors in recent months. But total media industry spending has been contracting. I believe there’s structural issues within the industry, particularly around pricing.

>> BACK TO THE NEWSLETTER: Click here to read other articles from this week's newsletter


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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WHAT’S ON THIS WEEK

week 15 December 2017
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    • CoreLogic Capital city house prices for the week just ended | 9:30 AM
    • 12
    • ANZ Roy Morgan Consumer Confidence weekly survey | 9:30 AM
    • 13
    • RBA Governor speaks at Australian Payment Summit | 9:30 AM
    • 14
    • ABS Labour force for November | 9:30 AM
    • 15
    • NAB Annual general meeting | 9:30 AM

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