18 Sharing Tips – September 20, 2021
Peter Day, Sequoia Wealth Management
Macquarie Group (MQG)
This well-managed group offers a diverse global business model. MQG has a strong balance sheet. It has tens of billions of dollars in stocks and assets under management. The company is poised to grow in a global environment of low interest rates. A positive dynamic favors the share price.
Mineral resources (MIN)
MIN recently announced a successful gas discovery at the Lockyer Deep-1 well in the Perth Basin. If the throughput test proves successful, MIN will be able to accelerate its decarbonization plans in its mining operations in Western Australia. The completion of the flow test and updates to MIN’s iron ore and lithium growth plans present key short-term catalysts for the stock.
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RHP provides cloud and technology solutions. The share price benefited from a takeover bid from Norwegian computer consulting firm Crayon Group at $ 2.50 a share. Rhipe’s board of directors has recommended shareholders vote in favor of the program at a meeting scheduled for October. If the program is approved, Rhipe intends to potentially maximize returns to shareholders via a fully franked authorized special dividend.
Helloworld Trip (HLO)
The pandemic helped the company report a normalized net loss of $ 31.1 million for the year 2021. This was ahead of our forecast of $ 27.9 million. On a more positive note, federal government contracts underpin the group’s revenue to some extent. Despite the uncertain outlook due to COVID-19, the company has inherent value within its business units, which may not be fully reflected in the share price.
Our price target for this construction products company fell from $ 6.70 to $ 6 after analyzing underlying earnings revisions in continuing operations and updating capital expenditure forecasts. We maintain a lean recommendation due to near-term uncertainty regarding prices, volumes and the outlook for the pandemic to continue.
ANZ Bank (ANZ)
Our analysis of mortgage activity over the past four years leads us to conclude below the growth of the system for the most part. One exception was a period of top system growth following a celebrity ad campaign. In our view, the underperformance of mortgages is likely related to restrictive credit policies, a shrinking physical network and a lack of service through the broker channel. ANZ is our least preferred large bank.
Harrison Massey, Argonaut
Centaurus Metals (CTM)
Centaurus is developing the Jaguar nickel project in the Tier 1 mining province of Carajas in Brazil. Centaurus currently has a JORC compliant resource of 58.5 million tonnes at 0.96% nickel. The company recently released a value-added scoping study which it says confirmed the strong economic fundamentals of the project. It will focus on the production of high quality nickel sulfate. The production of nickel sulphate generates a smaller carbon footprint and generally generates much better premiums.
Genesis Minerals (GMD)
Genesis Minerals is focused on the development of the Ulysses gold project in the Leonora mining region of Western Australia. Ulysses currently has a JORC resource of 27 million tonnes at 1.8 grams per tonne of gold for 1.6 million ounces of gold contained. A mineral resource update is expected by the end of calendar year 2021. Genesis recently completed the transformational acquisition of the Kookynie gold project near Ulysses, which is expected to add significant value to the exploration program of the society.
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Poseidon Nickel (POS)
Poseidon is a nickel sulfide explorer who operates the Black Swan nickel project in Western Australia. The company recently focused its exploration program on the Golden Swan resource within the Black Swan asset and identified several significant nickel intersections at grade and depth. Following the capital raising in August 2021, the company has additional funds to undertake further drilling programs of its assets.
North Star Resources (NST)
Following the acquisition of Kalgoorlie Super Pit and the merger with Saracen Mineral Holdings, NST holds a portfolio of quality gold assets. Ongoing cost pressures and labor issues have put pressure on the entire industry and margins are starting to shrink. Northern Star remains a staple stock for the bullish gold investor. However, in our opinion, higher gold prices must emerge to make NST a profitable buy.
Domino’s Pizza Enterprises (DMP)
The fast food giant operates worldwide. The business has benefited from food delivery during COVID-19 shutdowns. Domino’s recently traded on a relatively uninspiring dividend yield of around 2%. The share price doubled between the end of November 2020 and September 16, 2021. At these levels, it may be prudent to take some profits.
Paladin Energy (PDN)
Paladin owns 75 percent of the Langer Heinrich uranium mine in Namibia. Uranium spot prices have risen by more than 25% in the last month to September 16, 2021. But, in our opinion, prices need to rise further for PDN to derive significant revenue from production. The Paladin share price doubled in the past three weeks through September 16 thanks to improving sentiment in the uranium space. It might be worth it to take profit off the table at these levels.
Peter Moran, Wilson
Full Diagnosis (IDX)
IDX provides diagnostic imaging services in Victoria, Queensland, Western Australia and New Zealand. The company has experienced strong growth over the past five years. Fears that lockdowns and wage increases could negatively impact earnings have recently led to a lower share price. In our view, these issues are short term and the fall in price provides a buying opportunity. We are maintaining an overweighting.
Silk Laser Australia (SLA)
The growing demand for non-surgical cosmetic products and services has driven the growth of SLA in recent years. Silk recently acquired Australian Skin Clinics, bringing the number of clinics to an increase from 61 to 117. The acquisition is expected to increase earnings per share by up to 20 percent. We are maintaining an overweighting.
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This hearing implant manufacturer has an impressive record of long-term growth, through continuous research and development. Cochlear increased its market share in the second half of fiscal 2021, although underlying growth in the broader market has been weak. As a result, underlying profit for 2021 was lower than expected. The company has lowered its earnings guidance for fiscal 2022. We hold a market weighted rating.
AMA Group (AMA)
The auto repair group has raised $ 150 million to pay down debt and provide working capital for growth initiatives. The business has been negatively impacted by COVID-19 lockdowns. Assuming COVID-19 lockdowns ease, AMA plans to expand to 180 sites in the medium term. This is expected to increase revenue to around $ 1 billion. Stocks are currently trading around our valuation. We hold a market weight rating.
Bravura Solutions (BVS)
BVS provides software solutions to the wealth management, life insurance and fund administration industries. The company’s 2021 result has met expectations. However, in our opinion, disappointing forecasts for fiscal 2022 and the departure of its chief executive suggest that a return to pre-COVID-19 profits may take time. Bravura needs to generate customer growth despite tough times. Our rating is underweight.
Elmo software (ELO)
This cloud-based employee management software provider is increasing its revenue. But the consumption of money is a problem, in our opinion. The company has net cash of approximately $ 80 million. However, based on our analysis at this point, we believe that a capital increase in the next one to two years is a possibility. Our rating is underweight.
The above recommendations are general advice and do not take into account an individual’s goals, financial situation or needs. Investors are advised to seek advice from their own professional before investing. Please note that TheBull.com.au simply posts broker recommendations on this page. The posting of these recommendations does not constitute a recommendation on the part of TheBull.com.au. You should seek professional advice before making any investment decision.