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December, 2017 3:01 PM



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18 Share Tips - 20 November 2017

18 Share Tips - 20 November 2017

By Anthony Black 20.11.2017



Jeremy Hook, TMS Capital 

BUY RECOMMENDATIONS
 
Auckland International Airport (AIA) 

Chart: Share price over the year

AIA has retreated into buy territory to close at $5.51 on November 15. Its Auckland and Queenstown airports are performing well and the company has a strong balance sheet. It may sell non-core holdings in Cairns and Mackay airports to further redevelop its principal asset. Offers a good yield and traffic numbers that should continue to grow strongly in coming years. This should support upside in the share price.
 
Fletcher Building  (FBU) 

Chart: Share price over the year

FBU has been through a difficult year with losses on a couple of large projects in the construction division. Two earnings downgrades this year and a management overhaul have impacted the share price. But the stock has been oversold and there’s value in the low $6 region. Consider buying while out of favour and wait for a return to positive news flow in 2018. The shares closed at $6.32 on November 15.
 
HOLD RECOMMENDATIONS
 
Ramsay Health Care (RHC) 

Chart: Share price over the year

The global hospital group was sold off after its August report. Concerns over growth at its French hospitals were overdone, in our view. The stock closed at $64.86 on November 15. Its diverse asset mix in the UK, Australia, Europe and Asia is a key beneficiary of the ageing population theme.
 
Magellan Financial Group (MFG) 

Chart: Share price over the year

Has cracked $56 billion in funds under management with the launch of the Magellan Global Trust in October. MFG generates strong returns, pays a good dividend and is worth buying on dips to $24. But when at the mid $26 level, it’s fairly priced. The shares closed at $25.51 on November 15.
 
SELL RECOMMENDATIONS
 
Bellamy’s Australia (BAL) 

Chart: Share price over the year

The company has turned around a dreadful year to make it a success. Riding a new wave of enthusiasm for infant formula and China-facing consumer stocks, BAL has rallied hard. But it’s now looking too expensive for us given it was recently on 33 times fiscal year 2018 profit.
 
IOOF (IFL)

Chart: Share price over the year

This financial services company has just raised capital to fund the purchase of the ANZ pension and investment units. This will increase the size of its dealer network, but it’s not without risk. Despite a healthy dividend, we prefer other stocks, such as MFG or Challenger in this space.


Jonathon Howe, Red Leaf Securities

BUY RECOMMENDATIONS

Transaction Solutions International (TSN)

Chart: Share price over the year

TSN recently bought cyber security company Decipher Works. Its customers are top tier businesses. We like the cyber security space and expect it to attract lot of investor attention in the years to come. The company still holds a 25 per cent interest in TSi India. I own shares in TSN. The shares were trading at less than a cent on November 16.

iBuyNew Group (IBN)

Chart: Share price over the year

This online real estate platform recently agreed to buy the assets of Indo-Pacific Property. We believe the stock will start to re-rate if shareholders approve the acquisition at the annual general meeting on November 21. We note IBN recently recorded its second highest cash receipts quarter of $1.32 million and is owed about $4.5 million in settlement income. I own shares in IBN. The shares were trading at half a cent on November 16.

HOLD RECOMMENDATIONS

Telstra (TLS)

Chart: Share price over the year

Telstra has offered to compensate about 42,000 customers for slow NBN speeds. This is a tier 1 telco/infrastructure play, recently offering a grossed up yield of 6.5 per cent. The company has reduced its dividends, but still expects to pay a total dividend of 22 cents a share this financial year. The company will have an ample war chest to chase value accretive and growth acquisitions.

BetaShares Australian Dividend Harvester Fund (HVST)

Chart: Share price over the year

A managed fund with exposure to most top 20 stocks. The fund aims to post about 10 per cent in annual dividends. This is a solid addition to any portfolio.

SELL RECOMMENDATIONS

The A2 Milk Company (A2M)

Chart: Share price over the year

This company is performing well in China. The shares have soared in the past 12 months to trade at $7.04 on November 16. Investors should consider taking some profits. 

Wattle Health Australia (WHA) 

Chart: Share price over the year

Another brilliant listing at 20 cents a share in March. This infant formula group was trading at $2.02 on November 16.

Keep in mind that revenues will need to catch up to a market capitalisation of almost $306 million. In my view, it’s prudent to be locking in profits in at these levels.


Justin Klimas, Wilsons

BUY RECOMMENDATIONS

Melbourne IT (MLB)  

Chart: Share price over the year

MLB has two divisions – enterprise services (ES) and small and medium business (SMB). ES provides digital marketing, mobile services and data analytics. SMB provides domain name registration, hosting and related services. Its first half result showed strong increases in revenue, EBITDA and net profit after tax. Its undemanding price/earnings multiple doesn’t reflect the company’s growth outlook.

Westpac Bank (WBC) 

Chart: Share price over the year

Full year cash profit was up 3 per cent to $8.062 billion. WBC retained a final dividend of 94 cents a share. Also, WBC continued to show improvement in its capital position. The ratio of stressed assets trended downwards, reflecting sound asset quality.

HOLD RECOMMENDATIONS

Xero (XRO) 

Chart: Share price over the year

We continue to view Xero as a quality accounting SaaS (software as a service) operator. First half results were stronger than expected. Subscriber growth and gross margin improvement were notable highlights. Pure cloud architecture, a stronger brand and global scale favours the investment case. This is balanced by a relatively full valuation.

TPG Telecom (TPM)

Chart: Share price over the year

The fiscal year 2017 result revealed good operational execution. There’s potential for TPM to gain a bigger share in the Australian and Singapore mobile markets. However, we view fiscal year 2018 guidance as weaker than expected. A lower dividend payout ratio (as capital is preserved) further supports our hold rating.

SELL RECOMMENDATIONS

Domino’s Pizza Enterprises (DMP)

Chart: Share price over the year

Year to date organic store openings are below our expectations. DMP is expecting to pass 1000 stores in Europe within 18 months, which is well below our forecast of 1055 stores by June 2018. The stock is way off its 12 month high of $70.79 on November 25, 2016. The shares closed at $46.74 on November 16 this year. 

Newcrest Mining (NCM) 

Chart: Share price over the year

The latest quarter on quarter pullback in gold production at Lihir was sharper than we expected. Similarly, Telfer production was below our estimates. Problems caused by the seismic event at the Cadia operation in April are still being resolved.


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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    • 12
    • ANZ Roy Morgan Consumer Confidence weekly survey | 9:30 AM
    • 13
    • RBA Governor speaks at Australian Payment Summit | 9:30 AM
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