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August, 2018 6:39 AM



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18 Share Tips - 7 May 2018

18 Share Tips - 7 May 2018

By Anthony Black 07.05.2018



Jonathon Howe, Red Leaf Securities

BUY RECOMMENDATIONS

Eve Investments (EVE)
Chart: Share price over the year

EVE is positioning itself nicely in the wellness and health sector with investments in Meluka Health and Omni Innovation. Meluka Health holds 100 per cent of Meluka Honey. We believe Meluka Honey has serious potential to develop into a big brand. Red Leaf raised capital for EVE in February 2018 and received a fee. I own shares in EVE. The shares closed at 1.1 cents cent on May 3.
 
iBuyNew Group (IBN)
Chart: Share price over the year

Its online real estate platform enables prospective buyers to compare, reserve and buy from more than 6250 listings across 300 developments. We believe the company has the potential to break even or be cash flow positive by the end of fiscal year 2018. Red Leaf raised capital for IBN in March 2018 and received a fee. I own shares in IBN. The shares closed at half a cent on May 3.
 
HOLD RECOMMENDATIONS 

Telstra (TLS)
Chart: Share price over the year

Telstra is a core holding in many investment portfolios and a solid dividend payer. We expect unlimited mobile data plans to drive new business. The 5G rollout will be a catalyst for a re-rating, in our view. The shares were priced at $3.08 on April 20. The shares closed at $3.22 on May 3.
 
Westpac Bank (WBC)
Chart: Share price over the year

Westpac is an attractive stock for value and income investors. The banking royal commission has exposed unacceptable behaviour in the financial services sector and stocks were punished. Westpac’s share price has risen more than $1 since April 26 to close at $29.37 on May 3. But WBC is still way off its highs prior to the banking royal commission.
 
SELL RECOMMENDATIONS

JB Hi-Fi (JBH)
Chart: Share price over the year

The consumer electronics giant recently downgraded its full year earnings forecast. Challenging conditions in the home appliance market, such as heightened price competition and unfavourable weather, had impacted the performance of The Good Guys chain. JBH may also face headwinds from a competitive Amazon. We’re avoiding this one for now.
 
Bellamy’s Australia (BAL)
Chart: Share price over the year

The China story has worked well for this infant formula company. However, we believe the stock is priced for perfection at current levels. Any sign of a China slowdown will potentially impact sales. We believe locking in part or all profits at current levels is diligent. The shares closed at $19.72 on May 3.

Peter Moran, Wilsons

BUY RECOMMENDATIONS
 
Pinnacle Investment Management Group (PNI)
Chart: Share price over the year

Pinnacle’s distribution platform is generating significant inflows from investors. An increasing skew towards retail clients is leading to higher margins. There’s likely to be complementary investment managers added in the future, further contributing to growth.
 
Mirvac Group (MGR)
Chart: Share price over the year

A diversified property group. The shares were priced at $2.53 on December 12, 2017. The shares were trading at $2.30 on May 3. We believe the price difference provides a good buying opportunity. Demand for Sydney and Melbourne office space is strong, benefiting leasing rates and the development business.
 
HOLD RECOMMENDATIONS
 
Ansell (ANN)
Chart: Share price over the year

Makes protective medical gloves and condoms. We like ANN’s strong market position and cashed up balance sheet. We also expect its transformation program will improve productivity and reduce costs. However, at current prices we believe this good news is priced in. ANN was trading at $26.64 on May 3. 
 
Wesfarmers (WES)
Chart: Share price over the year

The recent Wesfarmers sales update was in line with our expectations. Bunnings and Kmart continued to perform well. Coles slightly improved. We expect Wesfarmers will remain range bound until the Coles demerger is executed.                 
 
SELL RECOMMENDATIONS
 
Myer Holdings (MYR)
Chart: Share price over the year

The recent appointment of retail veteran John King as chief executive is a positive move given his previous experience. However, his job will be difficult given Myer’s recent falling sales in a very competitive retail environment. Limited room to move on the balance sheet means we’re avoiding the stock until we see improvement.
 
Class Limited (CL1)
Chart: Share price over the year

Provides SMSF (self managed super fund) software. The business has grown in response to customers moving to its cloud based platform. However, given strong cloud penetration, the low hanging fruit has been picked, in our view. We expect pricing and margin pressure going forward.


Tony Locantro, Alto Capital 

BUY RECOMMENDATIONS

Nanollose (NC6)
Chart: Share price over the year

Nanollose aims to produce plant free rayon fibre from coconut sugar and waste products, including alcohol, for the clothing industry. The key now is to prove it can upscale production from a small lab. It takes about 3200 litres of water to produce a cotton shirt. Nanollose’s plant free solution could be a step in changing this situation. A speculative buy. The shares closed at 15 cents on May 3.

Torian Resources (TNR)
Chart: Share price over the year

The gold company has pegged strategically in Western Australia’s Zuleika region, where several majors, including Evolution and Northern Star, are operating. TNR has released encouraging drilling results from various projects, and has the potential to become a self funding junior. I rate TNR a speculative buy on weakness. The shares closed at 6.3 cents on May 3.

HOLD RECOMMENDATIONS

AdAlta (1AD)
Chart: Share price over the year

The company is developing a treatment for idiopathic pulmonary fibrosis and other fibrotic diseases. The company has improved the potency and life of lead candidate AD-214 that could result in a more favourable outcome once it starts clinical trials. 

Red Metal (RDM)
Chart: Share price over the year

The March report highlighted several high risk/high reward projects as it moves towards drilling. The wet season in Queensland will lift, and several targets to be drilled have the potential to host mineralisation. The recent pegging of the Yarrie copper-cobalt tenement in WA is significant based on the potential for large scale Zambian style deposits. RDM is underpinned by a JORC compliant resource at Maronan in Queensland.

SELL RECOMMENDATIONS

Westpac Bank (WBC)
Chart: Share price over the year

The banking royal commission has exposed our major banks to significant scrutiny over lending practices and some startling claims relating to AMP. Westpac’s shares were priced at $28.13 on April 26. The shares closed at $29.37 on May 3. I remain concerned about Westpac’s interest only loan exposure. With property prices correcting in Sydney and Melbourne, I believe risk is to the downside.

Kidman Resources (KDR)
Chart: Share price over the year

The share price of this lithium company has soared in the past 12 months to close at $2.05 on May 3. However, momentum in the battery metals sector has slowed and several larger cap stocks have corrected by more than 30 per cent. KDR has held on remarkably well, but is struggling to remain above $2. I believe better risk/reward opportunities exist elsewhere.

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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