Likes
Today CMC Markets’ Michael McCarthy likes Brickworks (BKW). He says an 8% lift in earnings reported last week, springing from a stronger balance sheet and lower gearing, points to solid operations.
“The stock sold off on a cautious outlook statement from management, offering what I view as an opportunity for investors between $15.50 and $16.”
Also, the Soul Pattinson cross-shareholding remains both a potential source of earnings uplift and a strong company defence.
Bell Direct’s Julia Lee, says that with gold due for a bounce after prolonged weakness, Northern Star Resources (NST) is looking good.
“Its recent acquisition of the Pogo underground gold mine at a time of depressed underlying gold prices is looking smart,” she says.
Pogo is a great, well-timed acquisition.
Dislikes
Michael doesn’t like Coca Cola Amatil (CCL) and says the current share price recovery is potentially an opportunity for investors to cash in.
“A constrained growth outlook and a forward PE around 18 times, means there are better choices for consumer exposures, notwithstanding the recent Kombucha purchase,” he says.
And Julia dislikes Estia Health (EHE), based on an expected spotlight on quality in aged care following on from the announcement of the Royal Commission.
“The key way to address quality would be to introduce mandated staff to resident care. Given the high turnover already present in staffing in this sector, this will be a big jump in costs in a sector that is struggling with profitability,” she says.
“Estia has the lowest employee expense as a percentage of revenues per place, but in reality I wouldn’t want to be holding any of the three listed aged care operators while the Royal Commission is going on.”
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