Growth is a theme with our stock selectors, who see a number of stocks with good prospects.
The growth story behind Blackmores (BKL) resonates with CMC Markets’ Michael McCarthy, who this week believes the business is trading at attractive price levels, bringing it back to a “more reasonable price-to-earnings (PE) at 28 times”.
However, the price fall is only “temporary” and McCarthy notes that a “desire for profit growth in a growth constrained environment should see the PE expand again to mid 30s”.
Although Challenger (CGF) is a “well-run business”, this week McCarthy says the business is expensive and a “likely downturn in enthusiasm for its annuity products as risk appetites rise could bring a re-calibration of the share price”.
Raymond Chan from Morgans likes the footwear and clothing store RCG Corporation (RGC) as the business “offers growth on guidance which we think is conservative”.
However, he does not like utility business Duet Group (DUE) despite the company’s high yield. Chan says that there are “some risks on the high dividend yield after fiscal 2017”.
Elio D’Amato from Lincoln Indicators likes the Burson Group (BAP). According to D’Amato, the retailer and wholesaler of automotive parts operates in a “resilient industry” which makes the business remain steady through various states of the economic cycle.
“Recent and successfully implemented acquisitions including Metcash Automotive Holdings provide strong contributions to earnings growth,” D’Amato says.
D’Amato does not like Woolworths (WOW), despite the retail conglomerate reinvesting in price and service. He notes that industry competition continues to increase.
“In addition to operational challenges, the company’s issuer rating was recently downgraded by credit rating agency Moody’s,” he says.
[1]Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.