18 Sharing Tips – September 26, 2022
Elio D’Amato, Spotee Connect
Illuka Resources (ILU)
This mineral sands producer recently delivered a solid interim report. Sales exceeded production, and all at high zircon prices. The company is expected to start its rutile plant in Western Australia by the middle of next year. The Eneabba rare earths refinery will be a new engine of growth, following recent approvals and a $1.25 billion non-recourse loan from the Australian government for its construction.
92 Energy (92E)
A uranium prospector operating in Canada, 92E is drilling its Gemini prospect near the McArthur River mine, which is one of the largest and best uranium mines in the world. In addition, 92E acquired a 100% interest in the Wares uranium property in the northern region of the prospective Athabasca Basin. Given a dynamic uranium price, 92E offers superior risk/reward return potential.
Mineral Resources (MIN)
Shares hit all-time highs on speculation that the company may be considering divesting its world-class lithium assets and possibly listing in the United States. While a U.S. listing doesn’t guarantee success, splitting its lithium and iron ore operations into separate entities could create value. While nothing was certain as of September 21, the market is excited by this prospect.
Chronos Australia (CAU)
This medicinal cannabis company is a profitable and low-leverage stock. It pays a dividend and is a leader among its peers. The company has a unique advantage via its CanView platform, which is an online marketplace allowing transactions between producers and distributors. The platform generates an increasing number of patients, pharmacies, doctors and products.
The data center provider should see sustained demand for its services. However, in our view, the cost of providing services is set to increase exponentially, with the price of energy being its primary operating expense. Margins are under pressure, according to our analysis. NXT broke price support at $9.78, so we expect to see more selling from here. The shares closed at $9.30 on September 21.
Newcrest Mining (NCM)
The US Dollar is likely to stay stronger for longer, so gold bulls may have to wait for the much-anticipated inflationary trades. Gold production guidance of between 2,100 and 2,400 ounces for fiscal year 2023 is lower than expected. All in sustaining costs between US$930 per ounce and US$1,070 per ounce is higher than expected. Other stocks are more attractive at the moment.
Arthur Garipoli, Seneca
Sarytogan Graphite (SGA)
The explorer drills graphite in Kazakhstan. The JORC inferred resource showed the highest grade and second largest deposit compared to ASX peers. It recently added another drill rig on-site, with the aim of extending mineralization and upgrading its existing JORC inferred resources. We expect the resource to continue to be defined. There is potential to upgrade the zones of mineralization from inferred to indicated.
This employment and education company reported a strong result for fiscal 2022. Revenue from continuing operations increased by 47% compared to the previous corresponding period, while EBITDA increased by 53%. The market did not retain the good result based on an uncertain macro-economic outlook. Seek is a cyclic activity. The stock offers upside potential based on valuations, due to a tight domestic labor market.
West Farmers (WES)
Earnings before interest and taxes in fiscal 2022 were slightly lower than in fiscal 2021, but higher than the consensus forecast. The company has strong distribution brands. WES should be able to weather the pressures on household budgets due to rising interest rates. The Bunnings hardware chain is a major contributor to the company’s profits. It should continue to benefit from people continuing to invest in their homes.
Coles Group (COL)
The supermarket and spirits giant’s result for the 2022 financial year was in line with market expectations. Like most retailers, COL has faced cost pressures in response to COVID-19. In a higher interest rate environment, Coles can be nimble enough to attract buyers by securing affordable prices.
Zip Co (ZIP)
This “buy now, pay later” business faces higher costs in a highly competitive and crowded industry. In our view, discretionary consumer spending will likely be impacted by rising interest rates and rising costs of living. The stock price fell from $4.33 on January 4 to 73 cents on September 21. The outlook presents challenges in a difficult economic environment.
Cettire is an online luxury goods retailer. The company posted a statutory after-tax net loss of $19.062 million in fiscal 2022. Shares fell from $3.67 on Jan. 4 to 88 cents on Sept. 21. A higher interest rate environment could, in our view, put pressure on the company’s earnings. . Other stocks offer more attractive prospects at this time.
Jean-Claude Perrottet, Medallion Financial Group
The blood products company’s annual results have been positive in response to strong demand for flu vaccines, we believe. CSL is deploying a new technology in the United States, which reduces the duration of plasma donation procedures by approximately 30%. These innovations are expected to improve the collection process and as a result we maintain a positive long-term view of CSL.
Internally Displaced Education (IEL)
This global education services provider reported a strong result for fiscal 2022. Margins improved to 24.8%, the highest in company history. Revenue increased 50% over the prior corresponding period in response to a 45% increase in student placements and a 67% increase in international English testing. With Australian student placement volumes expected to increase, IDP offers great prospects.
Goodman Group (GMG)
This integrated commercial and industrial real estate group delivered a strong result for fiscal 2022. The company expects earnings per share growth of 11% in fiscal 2023. Other bright spots are an occupancy rate of 98 .7% and a history of improving forecasts.
Pilbara Minerals (PLS)
The company has significant lithium assets. Revenue of $1.2 billion for fiscal 2022 increased 577% from the prior corresponding period. The company has nearly $900 million in cash and cash on its balance sheet. Despite higher-than-expected costs, PLS has raised its production forecast for fiscal 2023. The outlook is bright if prices remain high.
Harvey Norman Holdings (HVN)
The retail giant reported net profit after tax of $811.53 million in fiscal 2022, down 3.6% from the prior corresponding period. The company expects low unemployment and growing immigration to support demand. However, we are cautious about the outlook for the retail sector due to higher interest rates, which should reduce discretionary spending.
Scentre Group (SCG)
The shopping center giant owns and operates 42 Westfield Life Centers in Australia and New Zealand. Recent half-year results exceeded estimates. Operating profit of $540.5 million increased by 17.5% compared to the previous corresponding period. However, online retailers can provide tougher competition to brick-and-mortar malls in a higher interest rate environment.
The recommendations above are general advice and do not take into account any individual’s goals, 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 constitute an endorsement by TheBull.com.au. You should seek professional advice before making any investment decision.