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Tuesday 16

October, 2018 1:30 PM



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18 Share Tips - 8 October 2018

18 Share Tips - 8 October 2018

By Anthony Black 08.10.2018



James Bryce-Lind, Patersons Securities

BUY RECOMMENDATIONS

NRW Holdings (NWH)
Chart: Share price over the year

Solid management of this resources contracting company has been consistent in delivering on expectations. Increasing company earnings in fiscal year 2018 may continue on the back of a long list of potential projects. The share price has been moving up, pushing through key levels on high volume before recently consolidating between $2 and $2.15. Watch for a push above this level on volume. The shares were trading at $2.165 on October 4.

Wisr (WZR)
Chart: Share price over the year

Wisr is an emerging neo-lender offering unsecured personal loans to millennial borrowers. Wisr is committed to building products, apps and services in the Australian consumer finance market. Its proprietary Wisr app and credit rating tools demonstrate commitment to engaging its customer base much more than a traditional lender. The WZR loan book is growing at exponential rates.
 
HOLD RECOMMENDATIONS

Rio Tinto (RIO)
Chart: Share price over the year

RIO and rival miner BHP Billiton will return sizeable amounts of capital and franking credits to shareholders over the next 12-to-24 months. My preference for RIO over BHP is due to a sharper fall from highs over the past quarter. But both are worthy investments around current levels.

Netwealth Group (NWL)
Chart: Share price over the year

Weak price action suggests this wealth platform provider needs more time to rebuild its share price structure. While key support holds at $7.30, I remain bullish on the story. But larger volume down days remain a cause for concern. Long term, the story will prevail if new fund flow dominance continues. The shares were trading at $7.91 on October 4.
 
SELL RECOMMENDATIONS

Afterpay Touch Group (APT)
Chart: Share price over the year

The share price of this new age lay-buy platform provider has risen from a year low of $4.12 on October 5, 2017 to trade at $18.045 on October 4, 2018. The company’s buy now, pay later platform has been popular among Australia’s emerging tech generation. APT makes a material amount of money from late fees. It may face a tighter regulatory regime in future. Buyer beware.
 
RCR Tomlinson (RCR)
Chart: Share price over the year

The share price of this engineering group has fallen from a 12-month high of $3.55 on November 13, 2017 to trade at $1.055 on October 4, 2018. The company wrote down $57 million after cost over-runs involving the Daydream and Hayman Solar Farms Project. The company has since undertaken a capital raising of $100 million.

Jonathon Howe, Red Leaf Securities

BUY RECOMMENDATIONS

Isentia Group (ISD)
Chart: Share price over the year

The share price of this media intelligence and insights business has plunged from $1.925 on October 5, 2017 to close at 32 cents on October 4 this year. Revenue guidance for fiscal year 2019 is in the low to mid $120 million range and EBITDA guidance is in the low to mid $20 million range. In our view, recent share prices undervalue the company, as it’s been in a downgrade cycle for a long period. The stock could re-rate on upbeat AGM guidance. I own shares in ISD.

MyFiziq (MYQ)
Chart: Share price over the year

MYQ was one of the better performing stocks in 2017, but the share price has been slashed this year. The company’s technology enables accurate body measurements from a mobile phone image. The technology creates a representation of you in the form of a 3D avatar. The company provides software to partners in the health and fitness, insurance and medical industries. Any major contract win should see the stock do well. I own shares in MYQ.

HOLD RECOMMENDATIONS

Telstra (TLS)
Chart: Share price over the year

This telecommunications stock has performed well since July 1. We believe the stock is due for a re-rating with the 5G rollout. The stock has risen from $2.601 on July 2 to close at $3.25 on October 4. A good inclusion in any balanced portfolio.

Lynas Corporation (LYC)
Chart: Share price over the year

After an extraordinary turnaround story, the rare earths miner has been savagely sold off. Speculation surrounding a possible review of its future Malaysian operations has created uncertainty among investors. We believe the company is more valuable than its current price, with direct ore shipping to China still available. The shares have fallen from $2.89 on May 8, 2018 to close at $1.625 on October 4.

SELL RECOMMENDATIONS

The A2 Milk Company (A2M)
Chart: Share price over the year

We believe this dairy and infant formula producer’s good run in China is starting to moderate. New chief executive Jayne Hrdlicka recently sold her A2M shares. It would be prudent to be reducing this one.

REA Group (REA)
Chart: Share price over the year

Company CEO Tracey Fellows sold all but 12 shares in August. We believe this business is nearing its peak, with Australian property prices having peaked (at least in the short term) earlier this year. The shares were priced at $93.35 on August 20, 2018.  The shares closed at $82.70 on October 4. 

Tony Locantro, Alto Capital

BUY RECOMMENDATIONS

PharmAust (PAA)
Chart: Share price over the year

This clinical stage oncology company announced that its leading drug monepantel (MPL) has been successfully reformulated into a tablet for upcoming canine cancer trials. Researchers at the Olivia Newton-John Cancer Research Institute found the longer cancer cell lines are exposed to MPL, the greater the anti-cancer activity. This will be critical should MPL be the subject of human trials. A speculative buy.

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

RDM’s approach is to drill high impact targets, providing shareholders with multiple upside potential. The latest drilling program at the Great Southern Conductors in Queensland didn’t find any visible signs of copper-gold, and the share price was sold off. A JORC resource, significant joint venture expenditure and a pipeline of tier one targets underpin the company’s market capitalisation. For those with an appetite for risk, consider exposure to RDM based on an attractive risk/reward profile.

HOLD RECOMMENDATIONS

Metal Bank (MBK)
Chart: Share price over the year

MBK is building a strong portfolio of prospective gold projects in south-east Queensland, all with multi-million ounce discovery potential. The latest project acquisition 8 Mile appears to be an attractive target, as it’s close to a 2 million ounce gold resource and operating mine. During a lull in drilling activity, the share price tends to remain soft. But, in my view, MBK is a hold and perhaps an opportunity to accumulate on weakness.

Stavely Minerals (SVY)
Chart: Share price over the year

The hunt for a ginormous copper-gold deposit in Victoria continues on the back of encouraging drilling results. In my view, SVY is one of the highest risk/best reward exploration plays on the ASX. Strong management has its interests aligned with shareholders.

SELL RECOMMENDATIONS

REA Group (REA)
Chart: Share price over the year
 
Australia’s love affair with real estate is cooling and, in my view, is likely to continue. Increasing competition from competitor Domain is also another reason to lighten holdings. Shares in this global online real estate advertising company have been in a downtrend since August. 

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

Headwinds from likely property price falls, tighter lending restrictions and the potential for households to cut spending and reduce debt suggests the easy banking ride is likely to be over. I have long been concerned about Westpac’s interest only exposure.
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 19 October 2018
    • 15
    • N/A No items listed | 9:00 AM
    • 16
    • ANZ Weekly consumer confidence survey | 9:00 AM
    • 17
    • ABS Overseas arrivals and departures data | 9:00 AM
    • 18
    • ABS September job market figures | 9:00 AM
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    • N/A No items listed | 9:00 AM

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