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Tuesday 18

December, 2018 1:35 AM



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18 Share Tips - 17 September 2018

18 Share Tips - 17 September 2018

By Anthony Black 17.09.2018



Philippe Bui, Medallion Financial Group

BUY RECOMMENDATIONS

NextDC (NXT)
Chart: Share price over the year

Develops and operates independent data centres in Australia. The company delivered strong full year results, with revenue up 31 per cent to $161.5 million and underlying EBITDA growing 28 per cent to $62.6 million. NXT is investing heavily in more data centres to increase future capacity. The market is eagerly waiting to see if NXT can continue to bring on new customers at the same rate. If NXT can successfully execute its strategy, the business is well positioned to take advantage of sector tailwinds. 

Speedcast International (SDA)
Chart: Share price over the year

Provides satellite-based communication networks and services. In our view, the full year results were clearly below market expectations due to a downturn in its energy division. But we believe the recent sell off has been overdone, as the company is still operating on strong double-digit growth numbers. The stock was recently trading on an attractive price/earnings ratio of 16 times.

HOLD RECOMMENDATIONS

Bapcor (BAP)
Chart: Share price over the year

Supplies and distributes automotive aftermarket parts in Australia and New Zealand. It has wholesale and retail businesses. The full year results were broadly in line with market expectations. A strong increase in margins is pleasing as it points to the company starting to leverage on its economies of scale.

IDP Education (IEL) 
Chart: Share price over the year

Provides international student placements and English language testing services. IEL also owns and operates several English language schools in South East Asia. The company reported strong full year results in August, with revenue growing by 25 per cent to $487 million and EBITDA by 28 per cent to $89 million. The roll out of its digital strategy underpinned these results.

SELL RECOMMENDATIONS

Flight Centre (FLT)
Chart: Share price over the year

Recent results for this global travel agency group were strong. But moving forward, there is a risk of continuing pressure on operating margins, as shown in the past few years. Although Flight Centre has recently closed underperforming shops, competition in the online space remains fierce.

Primary Health Care (PRY)
Chart: Share price over the year

PRY has a network of medical, diagnostic imaging and pathology centres across Australia. Current valuations seem high given the recent modest trends in earnings growth and operating margins. The price/earnings multiple is trading at a premium compared to earnings growth. We’re concerned as to whether PRY can extract enough synergies after acquiring seven Montserrat day hospitals capped at $138.5 million.

Simon Herrmann, wiseowl.com

BUY RECOMMENDATIONS
 
Noni B (NBL) 
Chart: Share price over the year
 
Owns a portfolio of clothing brands distributed via a network of 1350 stores and on online. Earlier this year, Noni B announced the acquisition of five additional brands – Millers, Katies, Crossroads, Rivers and Autograph – expanding its portfolio to nine brands. Successfully integrating acquisitions is projected to triple revenues in fiscal year 2019. If the recent growth trajectory continues, it may result in further capital management initiatives and drive shareholder value.

Genetic Signatures (GSS) 
Chart: Share price over the year

An Australian biotechnology company, focusing on molecular diagnostics. Its products detect infectious diseases. A recent Australian contract win has the potential to galvanise international buyers, so we expect sales and investor interest to accelerate ahead of potential registration with the US Food and Drug Administration in 2019. This is a speculative buy given the primary risks of capital demands and competition.
 
HOLD RECOMMENDATIONS
 
Fleetwood Corporation (FWD)
Chart: Share price over the year

A caravan manufacturer and provider of accommodation solutions and modular buildings.  Strategic acquisitions are revenue and earnings per share accretive. There is potential for a revival at Fleetwood. Management has a favourable track record of value creation. The equity raising in July was well supported by institutional shareholders. 
 
Coca-Cola Amatil (CCL)
Chart: Share price over the year

The soft drink bottler is rebounding following operational challenges and softer demand. It appears the turnaround is gathering pace and we believe it’s worth holding. Its half year statutory net profit after tax was up 12.8 per cent to $158.1 million. 
 
SELL RECOMMENDATIONS
 
Carnarvon Petroleum (CVN)
Chart: Share price over the year

The share price of this junior explorer soared after announcing a major oil discovery in July 2018. However, selling pressure has gradually increased after CVN reached a year high of 69.5 cents on August 8. The shares were trading at 35 cents on September 13.  Consider taking profits.

Adacel Technologies (ADA)
Chart: Share price over the year

Develops operational air traffic management systems and advanced air traffic control simulation and training solutions. Full year net profit after tax fell 9.5 per cent to $8.394 million. The share price hit a 12 month low of $1.454 on September 4. It was trading at $1.61 on September 13, but it’s way off its 12 month high above $3 in November last year. We believe market confidence remains subdued.


Darren Jackson, Sanlam Private Wealth 

BUY RECOMMENDATIONS

TPG Telecom (TPM)
Chart: Share price over the year
 
During the past three years, this company’s valuation has been slashed during rollout of the National Broadband Network. We expect the 5G network will be launched in Australia in 2019 and 2020. If the proposed merger with Vodafone Hutchison Australia happens, it will position the new TPG to potentially deliver faster, cheaper wireless internet over the 5G spectrum. In my view, 5G will effectively make the NBN redundant.   

Paladin Energy (PDN)
Chart: Share price over the year

The uranium miner has emerged from administration and has materially reduced its debt. We now like Paladin as a highly speculative investment offering leverage to an increasing uranium price. The shares were trading at 19.5 cents on September 14.

HOLD RECOMMENDATIONS

Capilano Honey (CZZ)
Chart: Share price over the year

A private equity consortium lodged a takeover bid for Capilano in August. The bid was $20.06 a share. However, Bega Cheese (BGA) has recently completed a $200 million capital raising after becoming a substantial shareholder in Capilano earlier this month. We believe a superior takeover bid for CZZ is a good chance. CZZ shares were trading at $21 on September 14.  
 
Thorney Technologies (TEK)
Chart: Share price over the year

TEK invests in quality technology companies. The share price was recently trading at about a 15 per cent discount to the latest NTA (net tangible assets). We believe investors will find value here. The share price was trading at 24 cents on September 14.

SELL RECOMMENDATIONS 

Kogan.com (KGN)
Chart: Share price over the year

The online retailer recently reported strong revenue and earnings growth. However, we have a cautious outlook given founder and CEO Ruslan Kogan and another director have sold some of their own stock. Online retailing remains a highly competitive and dynamic market.
 
REA Group (REA)
Chart: Share price over the year

REA operates residential and commercial property websites. Melbourne and Sydney residential property prices continue to fall. We expect advertising spending will eventually fall in line with property prices. Consequently, in our view, this directly impacts REA’s business.

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 21 December 2018
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    • ABS Overseas Arrivals & Departures publication | 9:00 AM
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    • RBA Minutes of the last Board meeting | 9:00 AM
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    • N/A No items listed | 9:00 AM
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