The Bull is an independent stock market newsletter owned and produced by Australia’s leaning financial journalists. “RUN WITH THE BULL” is a free weekly newsletter featuring 18 stock tips from 3 market analysts. Today was my first contribution, attached below. To see the full list, check out The Bull’s 18 Share Tips here
Please note – There is a strict word count to keep the commentary short and sharp and the recommendations were submitted early last week. I’ve been in a stress mess all week as Telstra got both a downgrade and an upgrade, while Afterpay had a huge rally on Friday. I’ve also set up a table where I’ll be monitoring the progress of my “tips”, and if it’s any good I just may publish it!
Fiona Clark, Prime Value Asset Management
BUY RECOMMENDATIONS
InvoCare (IVC)
Chart: Share price over the year
Since entering a significant downtrend last December, exacerbated by a profit downgrade earlier this month, shares have rebounded and triggered several technical buy signals. Investors at the recent AGM were relieved to learn that short term pain associated with the protect and grow capital expenditure plan should deliver long term benefits for earning going forward. Shares in the funeral operator closed at $12.91 on May 24.
G8 Education (GEM)
Chart: Share price over the year
Shares in this childcare operator have fallen around 40 per cent since a guidance downgrade in December 2017. The key issues have been lower occupancy rates (strong supply growth) and changes to staff ratios. The supply environment is still challenging, but is expected to moderate, while the new childcare funding package should improve occupancy and revenue. GEM offers growth potential with high yield, but financial health is an issue, so this is a higher risk position.
HOLD RECOMMENDATIONS
CSL (CSL)
Chart: Share price over the year
A strong result in February was followed by a recent guidance upgrade from better than expected sales of haemophilia products and a severe flu season. This is a quality company with a strong track record of consistent earnings growth. While it’s hard to get excited at the current price, downside should be limited due to its size, strength and general investment appeal. The shares closed at $183.10 on May 24.
Flight Centre (FLT)
Chart: Share price over the year
The global travel agency combines strong projected earnings growth, a modest dividend and strong balance sheet. It’s a strong brand, which has managed to combine the traditional physical shop fronts with a successful online strategy that appeals to a variety of customers. The first half earnings report was good and fiscal year guidance was upgraded. However, in our view, the valuation is stretched, so it’s a struggle to say buy.
SELL RECOMMENDATIONS
Afterpay Touch Group (APT)
Chart: Share price over the year
Shareholders in this technology driven payments company have enjoyed a great run since APT listed in June last year. News of US expansion provides further scope for growth. But potential for tighter regulation, an exorbitant valuation and the release of escrowed shares earlier this month all add up to increasing downside risk.
Telstra (TLS)
Chart: Share price over the year
Facing intense competition and an increasingly fickle customer base, even the competitive advantage of network quality is under fire after recent outages. Even holding for yield might be at risk. Just when you think the shares can’t go any lower, another problem arises. It might be a trade one day, but not yet.
RunningMoney 