The Bull: Buy Hold Sell

Arthur Garipoli

https://thebull.com.au/18-share-tips/20-may-2024/

 

Arthur Garipoli, Seneca Financial Solutions

BUY RECOMMENDATIONS

BUY – PEXA Group (PXA)

PEXA operates a leading digital property platform and settles most transactions in Australia. The company is trying to replicate its Australian success in the UK. PXA recently announced it was progressing a strategic partnership with NatWest Group in the UK. Investors responded positively to the PEXA announcement. PEXA is poised to benefit further if it can expand its platform to other UK firms.

BUY – BHP Group (BHP)

BHP’s revised takeover bid for London listed mining company Anglo American has again been rejected. BHP recently increased its bid by about $4 billion after the initial bid of about $60 billion was rejected. BHP is targeting Anglo American’s copper assets. We believe BHP’s strategic move makes sense, as a successful transaction would enable it to become one of the world’s largest copper producers. Irrespective of the final outcome regarding the takeover play, BHP’s share price offers value despite a recent partial recovery.

HOLD RECOMMENDATIONS

HOLD – NextDC (NXT)

This data centre service provider recently raised $1.322 billion to fund future growth plans. Investors responded positively to the capital raising. Artificial intelligence should drive strong demand for data capacity in the future. Expanding data storage capacity paints a bright outlook for NXT. The shares have performed well since mid-April up until May 16.

HOLD – Amcor Plc (AMC)

This global packaging giant’s recent results highlighted an improvement in volume trend margins. Management appears to be focusing on cost control. The shares have risen from $13.82 on April 30 to trade at $15.445 on May 16. In our view, AMC is worth holding as we expect volume demand for packaging to increase and enhance shareholder value.

SELL RECOMMENDATIONS

SELL – JB Hi-Fi (JBH)

This consumer electronics giant recently posted a solid third quarter sales update in fiscal year 2024, which was in line with consensus forecasts. Higher interest rates and cost of living expenses are impacting consumer spending. In our view, investors haven’t fully factored in the impact of weaker consumer spending into the share prices of discretionary retailers. JBH is trading at a premium, in our opinion.

SELL – Commonwealth Bank of Australia (CBA)

Australia’s biggest bank posted a marginally better than expected third quarter result for fiscal year 2024, which reflected similar themes to its peers. We note a decline in net interest margins and lower revenue growth coupled with increasing cost pressures. We acknowledge CBA is the premier bank, but we can’t justify its valuation premium compared to competitors. Investors may want to consider taking a profit.