Best Shares To Pick On The Australian Share Market

  • Share to buy: Nanosonics (NAN)

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    December quarter sales were up 41% on the prior quarter, as North American direct sales gained momentum.

    The company's move into the US market seems to be paying off, with gross margins improving significantly.

    The next driver of share price could be publication of decontamination guidelines in the UK and Scotland favourable to Nanosonic products.

    Technically, the stock remains strong and has broken out to fresh all-time highs recently on rising volumes.

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  • Share to buy – Whitehaven Coal (WHC)

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    Until recently, we've viewed a lack of market confidence as mis-pricing WHC.

    Over the journey, the company has maintained an earnings margin average of $13/t but it appears the market has been factoring in the future coal price and giving management little benefit for being able to sustain its margins, despite its track record.

    The risk lies with the thermal coal price outlook and whether China continues to retreat from the trade.

    Today the company announced record high ROM coal production of 5.7Mt for the March quarter, up 21% compared with the previous corresponding period and 44% YTD.

    The company also recorded its highest quarterly saleable coal production of 5.3 Mt for March, up 28% compared to a year earlier, and 48% YTD.

    Whitehaven Coal says that it is on track to meet FY2016 guidance for saleable coal to be in the range of 19.5 Mt to 20.1 Mt.

    The miner says that costs guidance for the full year FY2016 is now expected to be $57/t.

    We think momentum can now build in the stock and are prepared to be buyers..

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  • Share to buy – Ramsay Healthcare (RHC)

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    Company Snapshot:

    • Market cap: $12.01 Billion
    • Recent share price: $59.9
    • Cash/debt: $315.86 million/$3.17B
    • Trailing P/E: 32.64

    Ramsay Healthcare is the largest private hospital operator in Australia and one of the top five hospital companies in the world. It has a presence in the UK, France, Indonesia and Malaysia. In Nov 2015, they inked a joint venture agreement with one of China's leading medical universities to build a number of new private hospitals in China's Pearl River Delta thus expanding its reach further.

    RHC has a strong competitive advantage, which it has leveraged to grow its business. Key features include;

    • Guaranteed demand given the growing ageing populations on a global scale 
    • Pricing power over its customers, insurers and governments, which often have no alternative but to use Ramsay’s services.
    • Buying and building hospitals is very expensive and this is a major deterrent to other companies looking to enter the market.
    • Ramsay has also proven to be very astute at building new beds at just the right pace to grow earnings without increasing supply beyond demand. 
    • Ramsay delivered solid growth in FY15 with revenues, core earnings per share and full year dividends increasing by 49.8%, 20% and 18.8% respectively.
    • Management has provided guidance of 12-14% earnings per share growth in FY16 barring any unforeseen circumstances.
     

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  • Share to buy – NIB Holdings Limited (NHF)

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    Company Snapshot:

    • Market cap: $1.48 Billion
    • Recent share price: $3.38
    • Cash/debt: $58.81 million/$63.89Million
    • Trailing P/E: 19.54

    NIB health funds is one of Australia’s largest health insurers, providing health and medical cover to more than 1.1 million Australian and New Zealand residents

    Private Health insurers are a segment of the market worth watching over the coming 12 months.

    Both Medibank Private and NIB have become increasingly vocal about the need to improve efficiencies in the healthcare system and to put a lid on the spiralling cost of care.

    With federal reviews into private health insurance and the Medicare Benefits Schedule, among other parts of the health system, there could be significant changes in fortune for the insurers who pay medical bills.

    Throughout 2015, NIB shares have been volatile after rising to nearly $3.90 in March before falling to a low of $3 in October.

    However, consistent profit and dividend growth has been a regular feature from NIB in recent years helping the company’s share price lift 10% for FY 15/16.

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  • Share to buy – BHP Billiton (BHP)

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    The big question on every investor’s lips right now is, ‘Should I buy BHP?’

    The Big Australian has fallen sharply in the last 12 months, having given up half of its value.

    The rout has come about due to slowing growth out of China and a subdued outlook for global economic growth.

    The Samarco mine disaster in Brazil has also weighed heavily, with BHP and partner Vale expected to be footing a multi-billion dollar bill for the tailings dam failure.

    These factors, coupled with massive oversupply in key iron ore and oil markets, have driven the share price south.

    But commodity slumps don’t last forever; booms turn to busts and back to booms in due course.

    And over the cycle, BHP has remained and will remain one of, it not the world’s best diversified mining companies, with an enviable portfolio of world-class assets.

    If you have a long-term investment horizon and are willing to put up with some volatility, now could be an ideal time to revisit BHP given the depressed share price.

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  • Share to sell – Graincorp (GNC)

    image001   GNC’s FY15 result was in line with the company’s guidance. We suspect that FY16 will be another below-average year for cropping and the winter harvest is likely to be downgraded over coming weeks. With the effects of the El Nino weather phenomenon also likely to weigh – through lower crop yields and less revenue from GNC’s grain handling business – as well as the stock being on the verge of breaking down technically, we feel shorts are an appropriate course of action. We wouldn’t be surprised to see the stock move towards the $6.50 region over the next 6-12 months.    

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  • Share to sell – Woolworths (WOW)

    CWN Graph WOW Woolworths’ recent results were weak and the company is under significant pressure from competitors. The underlying grocery business saw margin decline while Big W and Masters were weaker than expected. The results were the worst for the supermarket and retail giant since 2012. Things aren’t likely to pick up anytime soon either, with Aldi recently announcing that it not only plans to expand aggressively on the west coast of Australia, but also that it is planning to open even more east coast stores than previously forecast. Throw into the mix a pricing war with Coles - which Woolworths is losing - and more competition from another German brand, Lidl, and things are looking tough for WOW. On the technical front, all the bearish evidence we require is in place. 7 day trial

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  • Share to sell – Crown Resorts (CWN)

    CWN Graph Since topping our around $16 in February, Crown has really struggled and is presently trading near $11. Macau continues to weigh on the stock, while pressure on VIP remains. The Melco JV has been the primary cause of volatility and caution prevails regarding Macau because of China's macroeconomic environment. Technically, we're seeing everything that we want; the EMAs are in a bearish configuration, momentum is to the downside, the stock is only approaching oversold levels and the recent massive reversal provides our price action signal. 7 day trial

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  • Share to buy – Premier Investments

    On March 5th our Head of Research Chris Conway appeared on Sky Business and placed a BUY rating on Premier Investments (PMV), citing the company’s optimisation strategy and growth in its Peter Alexander and Smiggle brands as potential highlights ahead of the company reporting. On March 23rd Premier reported, delivering a 9% increase in half-year profit in defiance of harder times being faced its major department store competitorsPremier lifted its net profit to $56.3 million after stronger sales growth from across its key brands such as Smiggle and Peter Alexander. On the day of reporting, Premier closed up an impressive 11.1% [video width="640" height="360" mp4="http://www.australianstockreport.com.au/21jan_share-tips/wp-content/uploads/Premier-Investments.mp4"][/video]  

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  • Share To Buy Greencross Limited (GXL)

    Greencross Ltd (GXL) is an Australian-based veterinary services company providing veterinary care, disease prevention, and advice across all practices. Its veterinary services consist of pet retail and wholesaling, laboratories and boarding & grooming facilities.   The veterinary services businesses are divided into:

    • General practice, which offer consultations and associated diagnostics capabilities and general practice medical and surgical treatment options;
    • Emergency Centres, which provides full animal hospital facilities for after hours care and treatment of sick pets; and
    • Specialist Centres, which provides specialist veterinary care including medicine, surgery, animal behaviour, dermatology, cardiology, ophthalmology and dentistry in a full scale specialty animal hospital
    Merger potential A big reason for GXL’s huge share price gains has been its growth-via-acquisition strategy - the group has acquired 36 pet care clinics over the past two financial years. Similar to G8 Education (GEM), GXL is the dominant player in a highly fragmented industry with many small operators. In mid-November the group agreed to acquire Mammoth Pet Holdings, which operates under the Petbarn brand in Australia and Animates in New Zealand. The merger widens GXL’s visibility in the pet services market. In addition to being a vet clinic owner, Mammoth provides the group with a toehold in the lucrative pet supplies space. The acquisition is expected to be earnings per share (EPS) accretive in FY14, with stronger EPS accretion expected in FY15. Mammoth has delivered compound annual revenue and EBITDA growth of 22.6% and 25.4%, respectively over the past three years, similar to GXL. These are huge numbers and the growth is expected to continue as Petbarn continues its store roll-out program of around 20 new stores a year. Due to increased scale, GXL can expect to achieve post-integration cost synergies of $1.5 million in the first year alone. Cross selling opportunities arising from a bigger customer base and the complementary nature of the two businesses are also anticipated to yield immediate revenue synergies. Positive earnings outlook GXL has enjoyed turbocharged growth in recent years. FY13 saw underlying profit surge 35% to $6.4 million and revenue jump 29.6% to $106.7 million. Operating cash flow soared 31.8% to $10.8 million, allowing the group to issue a full year dividend of 10 cents, up 25% on-year. The Mammoth acquisition is expected to provide a further significant bump in earnings and cash flow over the next couple of years. In our view it will put GXL on the path to achieve its stated aim of growing market share from 4% to 20%.

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Exceptional Performance

Nov 2014 - Nov 2016

Our short-term focused Trading Report returned 30.03%, outperforming the ASX/200 Accumulation Index by 6.45%*

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DISCLAIMER:
*Performance is derived from recommendations provided by Australian Stock Report’s Trading Report, opened on or after date of acquisition in Nov 2014
*Return figures are gross returns and do not take into account fees or brokerage costs.
*Returns are calculated based on a $50,000 hypothetical portfolio, risking 2% of the overall portfolio balance ($1,000) as a starting point for each trade.
*Due to slippage and gapping, losses can sometimes exceed $1,000 on an individual trade.
*Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published.
*ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015

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