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Thursday 14

December, 2017 3:08 PM



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18 Share Tips - 30 October 2017

18 Share Tips - 30 October 2017

By Anthony Black 30.10.2017



Simon Herrmann, wise-owl.com

BUY RECOMMENDATIONS

Collaborate Corporation (CL8)

Chart: Share price over the year


A peer-to-peer sharing technology company, CL8 has built a strong foundation to leverage its strategic partnerships and tactically deploy its cash reserves to drive further revenue growth and scale. The DriveMyCar division is tracking towards a cash flow breakeven position, supported by a strong balance sheet and expansion into new markets through commercially proven campaigns with high profile channel partners. The recent launch of new business Mobilise offers additional upside. Our valuation stands at 6 cents. The shares were trading at 4.3 cents on October 26.

Platinum Asset Management (PTM)

Chart: Share price over the year


This fund manager offers profitable exposure to global equity market trends backed by an experienced management team with a strong track record of outperforming in challenging market conditions. Funds under management recently increased after a period of net outflows. We believe PTM is an attractive investment opportunity offering a mix of capital growth and income potential.
 
HOLD RECOMMENDATIONS

Freehill Mining (FHS)

Chart: Share price over the year


An Australian minerals company focused on iron ore mining in Chile. The company’s primary asset is the Yerbas Buenas project. Freehill has substantially increased production in the past six months, and upcoming drilling activities are designed to highlight the commercial merit to further expand Freehill’s operations. We have a neutral view, but see potential for the company to unlock value from the Yerbas Buenas project.

Beach Energy (BPT)

Chart: Share price over the year


Recently announced the $1.6 billion purchase of Lattice Energy, and we believe the acquisition is financially compelling and value accretive. However, given the complexity and size of the deal, we see integration risks and there’s no guarantee projected synergies can be realised. Beach Energy acquired a portfolio of assets at a favourable point in the cycle.
 
SELL RECOMMENDATIONS

RightCrowd (RCW)

Chart: Share price over the year


RightCrowd is an enterprise software company focused on compliance and security. The company’s channel partnership network is attractive. But, in our view, lumpy financials, a reliance on external capital and competition are the main hurdles. A favourable capital structure mitigates several risks, but the valuation assumes a substantial degree of ongoing growth, which, in our view, is speculative. 

Nusantara Resources (NUS)

Chart: Share price over the year


Focused on gold mining in Indonesia, we believe there’s better investment opportunities offering less risk in the gold space. With the final decision for the Awak Mas project due in mid to late 2018, we believe procuring project finance is the major hurdle. Investors need a long term speculative appetite in light of the development state of the company’s assets and the strategic location of the project.


Robert Makdissi, Baillieu Holst

BUY RECOMMENDATIONS
 
Freedom Insurance Group (FIG)

Chart: Share price over the year


The third largest player in the direct life insurance market. A recent valuation looks undemanding at 9 times estimated 2018 earnings. While we assume existing market segments will be steady, we expect further growth to emerge in new markets, such as in loan protection products. FIG is a well managed company trading at good value considering potential levers for growth.
 
Rio Tinto (RIO)

Chart: Share price over the year


We believe the healthy dynamics for high grade iron ore producers, coupled with a likelihood of further returns to shareholders, should see RIO remain the key risk adjusted investment case in the space.
 
HOLD RECOMMENDATIONS
 
Telstra (TLS)

Chart: Share price over the year


The share price was $4.33 on August 16. It was trading at $3.515 on October 25. The price fall reflects planned dividend cuts, the NBN transition and stiffer mobile competition. We believe the company share price offers an attractive entry point for long term investors. 
 
Fairfax Media (FXJ)

Chart: Share price over the year


The media giant provides a good entry point for investors looking for exposure to the future spin-off of Domain, a high growth business with strong management. The market is also undervaluing the print business. 
 
SELL RECOMMENDATIONS
 
Dexus (DXS)

Chart: Share price over the year


Dexus recently entered into an agreement to buy three investment properties for more than $730 million. While in-line with its strategy, the acquisition metrics look fully valued. If higher interest rates emerge, extracting value from this acquisition will test management.
 
Seek (SEK)

Chart: Share price over the year


The online jobs classifieds provider is a high quality company, but we struggle to justify the share price at current levels. The stock was recently trading on a P/E multiple above 30 times 2018 earnings estimates.


Tony Paterno, Ord Minnett

BUY RECOMMENDATIONS

Fortescue Metals Group (FMG)

Chart: Share price over the year


The iron ore producer posted fiscal year 2017 operating earnings of $US4.7 billion and net profit of $US2.1 billion. It declared a final dividend of A25 cents a share, 5 cents a share higher than our forecast. Overall, we continue to believe Fortescue looks attractive based on low price/net present value ratio of 0.9 times, a fiscal year 2018 enterprise value/EBITDA multiple of 4.3 times, high dividend potential, solid operational performance, strong free cash flow generation and balance sheet strength. 

Tassal Group (TGR)

Chart: Share price over the year


We rate Tassal due to a strong market position and the potential for significant growth. The Atlantic salmon producer has relatively stable returns and should be able to take advantage of a growing industry by increasing production. 

HOLD RECOMMENDATIONS

Primary Health Care (PRY)

Chart: Share price over the year


The business transformation project is taking longer than anticipated, so investors will most likely have to wait for any operating leverage to flow off the back of this restructure. As such, we see limited positive catalysts at this point for Primary. But we note the presence of substantial shareholder Jangho Group on the register, which may lead to corporate activity.

QBE Insurance Group (QBE)

Chart: Share price over the year


We expect an upward turn in the insurance industry cycle post the losses from catastrophes in the third quarter of calendar year 2017. Our analysis is based on past cycles. Commentary to date from the insurance industry has been mute. But we believe premiums will rise, so we have increased our earnings estimates for QBE. 

SELL RECOMMENDATIONS

Perpetual (PPT) 

Chart: Share price over the year


The forecast fully franked dividend yield of 5 per cent provides some support to the share price. This wealth manager was recently trading on a forecast price/earnings multiple of about 18 times, but we can’t see any signs of meaningful inflows in the short term. 

IRESS (IRE) 

Chart: Share price over the year


The UK business is expected to perform better in the second half. But the stock has already re-rated, so we have downgraded this financial services information provider to lighten. 

>> 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
    • 11
    • 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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