Top Stocks On The Australian Stock Market
Australian Stock Report offers you the latest tips and trends on the Australian Stock Exchange, so you can get the most out of every investment. Check out our advice below to find out what are the top stocks to consider investing in.
Our recommendations come with an in-depth analysis and explanation of why we’ve pinpointed our top stock options. Our investment experts follow the market closely to deliver you the best information on which Australian stocks to buy and sell at any given moment.
Here at Australian Stock Report, we deliver quality, independent reports to provide you with investment advice you can trust. Check out our Top Stock news and recommendations below.
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 – 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 – Macquarie Group (MQG)
Activity trends for MQG were positive in the recent quarter and the group should benefit from a medium-term positive earnings upgrade cycle. Optimism about MQG’s upcoming results has been gaining momentum of late, with the investment bank likely to benefit from further growth in FUM, volatility in financial markets and a lower AUDUSD. MQG will report full-year earnings on May 8, with consensus estimates suggesting net profit will come in at $1.51 billion. We wanted to position ourselves appropriately ahead of the announcement, hence our recent buy recommendation. The technical evidence is also strong, with a strong uptrend in place coupled with a recent retest and confirmation of a key round number - $80 – as support. With everything lining up fundamentally and technically, we wouldn’t be surprised to see a move towards $90. Read more tips on Blue Chip stocks on the ASX.
Share to buy – Toll Holdings Ltd
Toll Holdings (TOL) will sell five underperforming businesses, estimated to raise around $100m. We hail this as an improvement for operations and we’re now more confident the company can achieve its potential. Toll has an under geared balance sheet and as there is no need to reduce debt. As such, we suspect that there could be a capital return on the top of monetising the company's Singapore oil & gas supply base. On the technical front, TOL is displaying all the characteristics we would want to see. We have a solid bullish structure place, with the shorter-term EMAs crossed higher and the price action above the longer-term EMA filter, which is positive. Momentum is strong and amid an environment where yield plays are attractive, Toll Holdings fits the bills and should press higher. We’re targeting a move towards $6.80.
Share to Buy: Wesfarmers Limited (WES)
Wesfarmers (WES) is a diversified group with operations in hardware retailing, supermarkets, liquor and petrol, discount department stores, industrial supplies, coal mining, gas, fertilisers and chemicals. Its portfolio comprises of some of Australia’s biggest and well-known brands like Coles, Target, Kmart and Bunnings. Insurance sale Last month, Insurance Australia Group (IAG) agreed to buy WES’ insurance underwriting business for $1.85 billion. Wesfarmers is widely believed to have gotten a good price for from IAG. The insurance underwriting business generated only $136 million EBITA in FY13. That implies a transaction multiple of 13.6x, which is not cheap and suggests to us WES won out in the deal. The IAG deal followed WES’ decision to sell its 40% stake in WA-based industrial gas producer, Air Liquide (ALWA), for $100 million. Combined, WES netted approximately $2 billion from the two transactions with the cash inflow improving an already healthy balance sheet – net debt to equity was just 17% in FY13. With the balance sheet in good shape and no major capital spending programs on the horizon, we anticipate WES will use the proceeds to reward shareholders via a capital return initiative. 1Q14 sales WES’ 1Q14 sales results indicated food and liquor sales for the September quarter were $6.9 billion, up 4.4% on the previous corresponding period. Coles recorded comparable food and liquor store sales growth of 3.4%, with comparable food store sales growth of 4.0%. In a concern, the group noted food and liquor price deflation of 2.5%, due to significant fresh produce deflation and Coles' investment in lower prices. Whilst price deflation has been an ongoing issue for retailers, WES is faring better than its major rival Woolworths, which suffered food and liquor price deflation of 4.3% in 1Q14.
Fairfax Media (FXJ) On The Way Back
Fairfax Media Limited (FXJ) is an Australian multi-platform media group with a broad range of activities including news publishing, information and entertainment, advertising sales in newspaper, magazine and online formats, and radio broadcasting. FXJ conducts its core activities throughout Australia and New Zealand. Its major newspaper brands are The Sydney Morning Herald, The Age and The Australian Financial Review. Additionally, FXJ owns a range of business magazines, websites, and regional and community newspapers. Stayz sale part of restructure This week FXJ announced the sale of Australian holiday rentals site, Stayz, to HomeAway for $220 million. The sale is part of a focus on restructuring the business in response to an ongoing deterioration in advertising revenue. Earlier this year the group consolidated its Australian publishing businesses under the Australian Publishing Media division in an effort to drive efficiencies and simplify its business model. Also, the Domain and Digital Ventures businesses were separated into standalone divisions, allowing the group to devote increased resources and management attention to areas of the business likely to drive its future growth. FY13 results FXJ’s FY13 results revealed a net loss of $16.4 million and a 5.9% slide in revenue to $2.2 billion. On an underlying basis, net profit fell 28.6% 108.3 million. This accounts for the divestments of Trade Me Group, US Agricultural and Victorian Community Publications, as well as continued impairments of mastheads, goodwill and licenses. The asset sales and impairments were needed, however, to streamline the business and repair the balance sheet. Net debt to EBITDA fell from 1.8x in FY12 to 0.4x in FY13. Also, interest cover increased from 4.5x to 6.4x. On both measures, FXJ is comfortably ahead of its debt covenants. Outlook Following the Stayz sale the balance sheet is in even stronger shape. FXJ said it is on track to achieve cost savings of $1.6 billion in FY14. This will help alleviate pressure on the Metro and Regional businesses, which were suffering falling revenue at the start of FY14. In a positive, however, the group is expanding its digital footprint, with The Sydney Morning Herald and The Age experiencing strong growth in digital subscriptions. So it appears the FXJ is growing by shrinking, shedding non-core assets and driving cost efficiencies to offset weak revenue. At the same, the investment into its digital capabilities is yielding early success, helping to improve sentiment towards the stock.
Good News Gets Better For Rio Tinto
Rio Tinto (RIO) is an international mining company listed on both the Australian Stock Exchange and the London Stock Exchange. The group is an industry leader in most of the major commodities, including aluminium, coking and thermal coal, copper, manganese, iron ore, uranium, nickel, silver and titanium. Rio also has sizable interests in oil, gas and natural gas. China manufacturing growing again Iron ore makes up the most significant component of RIO’s business, around 44% of its overall revenue. Not only have iron prices risen around 19% since the end of June, but the outlook for the mineral appears to be improving. The iron ore recovery has coincided with data showing a return to growth for China’s manufacturing sector. On Monday, the HSBC Final PMI returned a reading of 50.8 for September, representing a slight acceleration in manufacturing growth from October’s 50.4 reading. It was also the third month in a row where China’s manufacturing sector expanded, adding to signs the economy is regaining its footing after a year slowing growth. Outlook Following a poor 1H13, RIO is generating a healthy dose of momentum and is ahead on a number of some of its strategic goals. Last week, RIO announced that iron ore production capacity will rapidly increase towards its targeted 360 million tonnes a year (MT/a), and at significantly lower cost than originally estimated. From a base run rate of 290Mt/a, RIO expects to reach its target between 2014 and 2017, with the majority of the increase to be delivered in the next two years. The miner expects to achieve this by expanding production at existing mines and securing productivity gains. The costs savings works both ways for RIO – helping to alleviate margin pressures in a weak commodity environment and increase earnings leverage to rising commodity prices. For all of our latest australian share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files. Read more: http://www.australianstockreport.com.au/share-tips/#ixzz2nKRlceAE
Webjet (WEB) Share To Sell
Webjet (WEB) is an online travel website, specialising in both domestic and international online flight bookings, accommodation, car rental, and insurance. WEB is Australia’s largest independent online travel site, competing mainly with companies offering similar leisure-related services, such as Jetset (JET), Flight Centre (FLT), Wotif.com (WTF), Expedia, and Bestflights.com.au. Earlier this year, the company acquired rival Zuji and launched business-to-business hotel aggregation platform, Lots of Hotels, for the Middle Eastern and African markets. The company derives its revenue primarily through booking charges and fees, with its main customers being the general public and tourists. Weak FY13 results WEB’s FY13 results weren’t that impressive for a company that traditionally trades on a high P/E multiple. Revenue of $66.5 million represented a rise of 15% on the prior year’s result. Underlying net profit was only 5.6% higher on FY12’s result, missing previous guidance of 15% growth. EBIT margin contracted 10 basis points to 32.4%, continuing a worrying trend where profit margins have fallen for three straight years. Business momentum is also heading in a negative direction, with Total Transaction Value (TTV) and flight booking volumes both declining from 1H12 to 1H13. Outlook WEB trades on a forward P/E of 13.5x, which is a discount to other online service providers, including closest rival, Flight Centre (FLT). The trend of shrinking profit margins is a worry, suggesting that WEB is losing market share to FLT and not getting enough return for each dollar spent on marketing and advertising. WEB followed up its disappointing results by offering relatively subdued guidance earlier this month. It warned that FY14 EBITDA was likely to be unchanged from a year earlier, at $21.5 million. The group admitted that the Australian market had been flat over the past year, but that it would still push on with plans to spend $3 million on marketing and technology, which was expected to weigh on the bottom line. This is a big worry given how important Australia is to WEB’s business. Moreover, the increased marketing and ad spend comes on top of the resources needed to integrate Zuji and support the launch of Lots of Hotels. Although the longer-term outlook appears more promising, FY14 is shaping up to be another disappointing year for FLT. The prospect for further margin erosion will be a key factor behind continued share price weakness in our opinion. For all of our latest australian share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Suncorp Group (SUN) Share To Buy
>> General Insurance, which offers personal and commercial insurance products in the motor, home and contents, travel, boat, and workers’ compensation segments. >> Suncorp Bank, which offers banking services to personal, agribusiness, small business and commercial customers. >> Suncorp Life, which offers life insurance and superannuation products.
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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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