Damien Nguyen, Morgans
BUY RECOMMENDATIONS
BUY – GQG Partners Inc. (GQG)
An update in May showed strong net inflows and a solid market investment performance across all of its core strategies. Total funds under management (FUM) stood at $US150.1 billion on May 31, 2024, up from $US142 billion on April 30, 2024. We believe GQG’s share price is poised to rise from FUM momentum leading to an earnings tailwind.
BUY – Generation Development Group (GDG)
GDG recently entered into a binding agreement to acquire the remaining 61.9 per cent of Lonsec Holdings’ fully diluted capital for $197.4 million. Lonsec has performed well since GDG’s initial investment in 2020. The acquisition enables GDG to further capitalise on growth opportunities in managed accounts, a high growth market. GDG’s own product suite, which includes investment bonds, has structural tailwinds. GDG is a leader in terms of market share and inflows in recent years.
HOLD RECOMMENDATIONS
HOLD – James Hardie Industries PLC (JHX)
Shares in this building products company were sold off aggressively on May 21 on the back of a weaker outlook in fiscal year 2025. Investors reacted to concerns that cost-of-living pressures are expected to negatively impact discretionary spending on renovations. However, we expect consumer spending to recover in line with an anticipated cut in interest rates.
HOLD – Lovisa Holdings (LOV)
Investors sold down the stock on news high profile company chief executive Victor Herrero was departing the company in May 2025. We believe the shares in this fashion jewellery and accessories retailer were oversold. A change in leadership doesn’t signal a switch in strategic direction, or affect the company’s potential global opportunities.
SELL RECOMMENDATIONS
SELL – IDP Education (IEL)
This international student placements company provided fiscal year 2024 earnings guidance that was below consensus. The short-term outlook appears challenging due to regulatory concerns and tougher market conditions. IEL estimates the international education market will decline between 20 per cent and 25 per cent in fiscal year 2025. We believe the entire sector faces challenges, and it may take considerable time before IEL returns to sustained growth.
SELL – Telstra Group (TLS)
The positive outlook for its mobile and enterprise divisions still fell short of expectations. Retaining ownership of its fixed infrastructure business InfraCo rather than selling it prevented unlocking value in the share price. Telstra was recently trading on a higher price/earnings multiple than its 10-year average and when compared to international peers. The shares have fallen from $4.30 on June 30, 2023, to trade at $3.54 on June 13, 2024.
Dylan Evans, Catapult Wealth
BUY RECOMMENDATIONS
Top Australian Brokers
BUY – Lynas Rare Earths (LYC)
LYC is the only major rare earths supplier outside of China. LYC has a high grade mine with at least a 30-year life. Long term, we’re excited about the company’s potential. It’s making good progress on its plans to double production of neodymium, a key ingredient for producing the magnets used in electric motors and generators. Demand for neodymium is expected to grow and support the price of rare earths.
BUY – Sonic Healthcare (SHL)
Sonic is one of the largest providers of pathology and clinical laboratory services in the world. The stock price has fallen significantly during the past 12 months, with the most recent drop a response to an earnings downgrade. Despite the bad news, we see SHL as a buying opportunity at its recent price. Company earnings fell post COVID-19, and it’s taken longer than expected to reduce costs. But it can regain momentum.
HOLD RECOMMENDATIONS
HOLD – Endeavour Group (EDV)
Endeavour has a market share of about 40 per cent in liquor retailing, via outlets including Dan Murphy’s and BWS. It also operates hotels and gaming facilities. The ever-present risk is a potential tightening of gaming regulations. But, in our view, such a risk is more than likely offset by the company’s liquor retailing division continuing to win market share.
HOLD – ANZ Group Holdings (ANZ)
The ANZ offers the best value of the major banks, in our view. The acquisition of Suncorp’s banking division paints a brighter outlook, as it will add important retail exposure to the mix. The group was recently trading at a price/earnings discount to peers, and on an attractive fully franked dividend yield above 6 per cent.
SELL RECOMMENDATIONS
SELL – IDP Education (IEL)
IEL is an international education organisation offering student placements in Australia and abroad. The shares have been drifting lower since August 2023, driven by investor fears of lower international student numbers and English testing volumes. In a recent update, the company expects the international education market to decline between 20 per cent and 25 per cent in the next 12 months. If this proves correct, profit in 2025 may fall below market expectations.
SELL – Santos (STO)
We prefer to have limited exposure to oil and gas given developed countries are beginning to transition from fossil fuels to cleaner energy, albeit slowly. There’s little doubt LNG will continue to be an important energy solution for years to come. However, gas prices are closely linked to oil markets, which were recently showing signs of oversupply as demand falls. OPEC is reluctant to cut supplies to support prices as it doesn’t want to run the risk of losing market share.
Angus Geddes, Fat Prophets
BUY RECOMMENDATIONS
BUY – 29Metals (29M)
The company provides leverage to elevated copper prices. Copper has entered a new bull market, a trend that could persist for years as demand is forecast to substantially outstrip supply from the massive energy required to provide computing power for artificial intelligence. The shares have risen from 18.5 cents on February 16 to trade at 47.7 cents on June 13. We have a speculative buy on the stock.
BUY – Gold Road Resources (GOR)
Gold price dips, such as the recent one, presents an opportunity to buy some gold mining exposures, as we expect the bull market to continue in the longer term. Gold Road Resources has quality assets and a solid balance sheet. The valuation is undemanding under our assumptions of continuing elevated gold prices. The company has cash and listed investment options. It offers growth potential, in our view.
HOLD RECOMMENDATIONS
HOLD – HUB24 (HUB)
HUB operates an investment and superannuation platform. It has captured market share in the huge and growing Australian superannuation market and this is likely to continue. The platform is often rated among the best in the industry, leading to impressive inflows through the cycle. Management is skilled at executing the company strategy.
HOLD – Amcor Plc (AMC)
AMC has established itself as a giant in the packaging world via a mix of organic growth and acquisitions. The packaging market remains fragmented, so there’s scope for more consolidation. Customer preferences are changing, and Amcor’s scale assists innovation in packaging. The company posted a stronger performance in its most recent quarter.
SELL RECOMMENDATIONS
SELL – The Reject Shop (TRS)
The discount retailer operates in a fiercely competitive market. Sales were up 4.2 per cent in the first half of fiscal year 2024 compared to the prior corresponding period, but statutory net profit after tax was down 11.1 per cent. Consumers are continuing to deal with an ongoing cost-of-living squeeze. The shares have fallen from $5.40 on January 4 to trade at $3.12 on June 13. Other stocks appeal more at this stage of the cycle.
SELL – Temple & Webster Group (TPW)
TPW is an online furniture and homewares retailer. It’s a well-managed business. Solid branding and positioning have delivered impressive returns for shareholders during the past five years. We expect the company to continue performing well compared to competitors. However, it was recently trading on triple-digit historical price/earnings ratio. The price/earnings ratio is uncomfortably high given the broader backdrop, as we expect consumers to continue tightening their belts. A stock to consider selling and possibly buying later at a cheaper price for longer term growth prospects.
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The above recommendations are general advice and don’t take into account any individual’s objectives, financial situation or needs. Investors are advised to seek their own professional advice before investing. 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.