Shares to Buy On The Australian Share Market
Share to buy – APN Outdoor Media (APO)
The evolution of Billboards from static to digital has presented significant growth opportunities for APO.
The company, since IPO (Nov 2014), has secured both existing Static Billboards as well as development options to develop Digital Billboards.
Given the ability to modify advertising on-demand using sophisticated yield management techniques for digital formats, the potential revenue uplift is significant.
This can be observed by recent revenue trends whereby revenues have far exceeded the company's and market's expectation.
Given the scalability of digital formats, this translates strongly for profitability.
At their most recent update, the company has also upgraded guidance due to acquisitions, increased market share and an increase in penetration of digital formats.
The company also confirmed the renewal and expansion of key Airport related contracts, in particular with Sydney Airport.
Share to buy – Rio Tinto (RIO)
Since bottoming out near $38 in December, iron ore has rallied to presently be trading above $48.
- Overnight, the bulk commodity jumped 3%.
- The bounce in iron ore, unsurprisingly, has coincided with a bounce in Rio Tinto which has completed a basing pattern and now appears poised to push higher.
- We are looking for a short-term rally in Rio and active traders can consider being buyers.
Share to buy – Magellan Financial (MFG)
MFG's recent numbers speak for themselves:
- 41% increase in profit
- 38% increase in dividend
- exceptional net inflows and a reduction in employee expense to income
Technically, after a sharp pullback the stock found support around $20 and has bounced strongly.
The recent bullish candle was a confirmation candle and a signal that traders should be happy to buy into.
Share to buy – Ramsay Healthcare (RHC)
- 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.
Share to buy – NIB Holdings Limited (NHF)
- 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.
Share to buy – BHP Billiton (BHP)
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.
Share to sell – Woolworths (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.
Share to buy – Challenger Financial (CGF)
Challenger’s recent results were strong, coming in ahead of expectations. We believe the stock to be good value, given a strong organic growth profile in an otherwise fully valued sector. Furthermore, the outlook for the Life Division is attractive, while the funds management operations continue to expand. It appears that a solid base has been set for earnings growth in FY16. On the technical front, Challenger looks poised to break higher out of the recent range, bound by resistance around $7.40. The EMAs are in a bullish configuration, momentum is building, volumes have picked up and the RSI is not yet in overbought territory.
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]
Share to Buy – Seek Limited (SEK)
In November last year, SEK reaffirmed guidance for 2015, expecting strong domestic online employment business as well as solid growth internationally. SEK's positive structural growth story being continues to be complemented by domestic cyclical momentum. The recent ANZ jobs ads numbers were supportive, with the widely-watched series rising 1.3% in January, and now 10% higher than they were a year ago. The bank said the more stable trend figure has now been going up for 15 months. Whilst the above is all good news, SEK is reporting on 17 February and this trade will be a play on those numbers. The graphic below shows that SEK typically rallies into and out of its reporting date. The blue line shows the average outperformance by SEK of the ASX 200 in the 30 days pre- and post-earnings. The statistical analysis if performed over the last 18 reporting events. Technically, SEK stacks up as well. There is an overarching bullish structure in place and although there appears to be stubborn resistance through $18.50, a strong result should see this region cleared. Using the reporting date as a catalyst, we’re targeting a move into $20.
VIEW SHARE market recommendations BY CATEGORY
Nov 2014 - Nov 2016
Our short-term focused Trading Report returned 30.03%, outperforming the ASX/200 Accumulation Index by 23.58%*
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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