Stock Tips (TLS, NEC, ALL, AZJ)

Stock tips are collated every month from different stockbrokers and financial planners around Australia. The aim is to have a variety of aggressive traders and conservative investors.

This month's analysis includes a "short" position. Feel free to ask a question in the comments below.


Full-Service Stockbroker

Luke Pilkington

Private Client Adviser

Stock Tip: Telstra Corporation (TLS)

Despite the wide-spread falls seen in the market recently, there is a good chance that there has been absolutely no significant change to the operations of the strong, proven companies such as Telstra.

Though some companies, like iron ore giant Fortescue Metals Group Limited, may have seen a shift in business conditions due to falling iron ore prices, on days of widespread volatility many other companies will not have changed.

Telstra has a moderate but still attractive Price to Earnings ratio of 15.68 with Earnings per Share of 34.40 and an annual dividend yield of 5.47% so is still an attractive investment in my opinion.

The stock price has recently pulled off 6.4% from its recent high of $5.76 made at the end of August. I think this provides us with an excellent entry opportunity.

Technically, we see the stock respecting it’s 100 day moving average, heavily oversold on the relative strength indicator and volumes decreasing as the selloff diminishes and the stock looks to move higher from these levels along with the broader market.

Feel free to contact Luke Pilkington directly via his website with any questions.

Company Website: Pilkington Trading

Australian Stock Report

Online Research

Benny Sada

Senior Equity Analyst

Stock Tip: Aristocrat Leisure (ALL)

ALL has significant overseas operations, with around 54% of company revenue derived from the Americas segment.

ALL operates against the backdrop of an improving US jobs market, that itself is likely to feed through to stronger consumer spending.

Positive currency translation benefits from a weaker US dollar would be icing on the cake for its business.

First half 2014 earnings were boosted $4.6 million from currency movements, or 8% of net profit, based on an average AUDUSD rate of 0.9100.

Given the speed with which the currency has fallen in the past month, and an expectation of further depreciation into 0.8000, ALL is likely to enjoy a stronger boost from FX movements in 2015.

ALL trades on a forward P/E of 19.7x, which is lower than in late March when the stock was trading on 21.7x.

Whilst 19.7x may appear high, the premium is warranted in our view based on earnings per share growth estimates of around 25% in each of FY15 and FY16.

Increased investment spending in the second half was likely to limit earnings growth, but longer term benefits are likely to come from its acquisition of US-based gaming machine provider, VGT.

Company Website: Australian Stock Report - Free Trial

Analysts & Research

Philip Davies

Trading Manager

Stock Tip: Nine Entertainment Co. Holdings (NEC)

Nine Entertainment Co. Holdings (NEC) is an Australian and media entertainment group with a presence across television, events and online. 

NEC delivers its content in multiple ways through free-to-air TV broadcasting, digital channels and online on Mi9's news and entertainment portal. Its assets include the Nine Network, Ticketek, Allphones Arena, Mi9 as well as interests in Sky News Australia and ASX-listed financial services company, Yellow Brick Road.

Short Term Case (90 day)
NEC is operating below its (5/25) DSMA which has now become a bullish indicator.

The long-term 90-day moving average shows significant upside and as extra protection we have put the stop-loss at the 12-month support level ($1.79) which is significantly lower than the 3-month support level we usually use.

The (14) RSI is bordering on oversold at these current levels and therefore we would be expecting to operate the majority of the period at a level within the $2.00-$2.20 short-term trading range levels.

This is a longer term play compared to some of our recent commodity based opportunities and so we expect to be holding it for close to the full 90-day outlook.

In line with this, we expect that as we head to the upper region of the range we will be able to move the stop-loss up to protect for the remainder of the period as we continue towards all-time highs.

NEC is currently trading 4.5c above the buy limit of $2.07.

Read the full report here or visit Wise-Owl using the link below for a free trial.

Company Website: Wise-Owl - Free Trial

Australian Stock Report

Online Research

Chris Conway

Head of Research and Trading

Stock Tip: Aurizon Holdings (AZJ)

*** Note: This recommendation is a "short only" trade ***

Aurizon’s FY14 results came in below consensus forecasts.

It’s disappointing that the company needs to take out more operating expenditure to achieve FY15 revenue targets and there is a significant increase in FY16 capex guidance with no corresponding change in margin guidance.

The company is also facing a number of headwinds, with short to medium term risk from labour and regulation likely to pressure the stock.

Finally, we believe that the West Pilbara iron ore project would be uneconomic if it weren't for the involvement of Baosteel.

The key risks are the construction of port and rail and the credit risk with Baosteel. Aurizon is yet to agree on a tariff structure with Baosteel.

Whilst the project could be accretive to Aurizon's profit in FY18, there remain a number of risks which need to be better understood.

These risks have been reflected in AZJ’s stock price recently, which has fallen from a high near $5.30 in August, to presently be trading around $4.60.

We now have a solid bearish structure in place, whilst the EMAs are in a bearish configuration highlighting the negative momentum in the stock.

There exists some important support through $4.60 but, if this region fails, a move into $4 is not out of the question. 

Company Website: Australian Stock Report - Free Trial

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