Stock Tips (FLT, SEK, TFC & MQG)

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.

Any adviser with a visible email or phone number is happy to be contacted directly with questions. Alternatively, you can ask a question in the comments below.

BBY

Full-Service Stockbroker

Luke Pilkington

Private Client Adviser


Stock Tip: Flight Centre Travel Group Limited (FLT)

FLT is currently trading at $46.43. We reiterate our ‘Buy’ rating on the company and a target price of $50.49 underpinned by our DDM valuation.

After reporting their full year results on 27th August 2014, the stock sold off to a low of $45.49 before rebounding strongly to close at $47.02.

Fundamentally, the franchise network is being revamped and expanded and is now over 2,500 stores. Its international business has added greatly to the bottom line, with overseas EBIT almost tripling in the past four years. Its UK market is the second biggest earnings contributor after Australia, yet the U.S. business is second in total sales. FLT recently acquired 90% of UK based Topdeck Tours, a coach tour operator. Total dividends increased 11% with the company paying out a fully franked $1.52 annual dividend. Revenue was up 13% to $2.2 billion.

From a technical perspective there is a strong support level around $44.00 that the stock has recently respected and we expect the stock to move higher from current levels.

The basic growth story is still there and we remain bullish on Flight Centre.

You can also contact Luke via his website.

Company Website: Pilkington Trading

Wise-Owl.com

Analysts & Research

Philip Davies

Analyst


Stock Tip: Seek Limited (SEK)

Seek Limited (SEK) operates a global online employment classifieds platform. SEK operates in 12 countries. SEK operates in three main business segments being: online employment classified advertising (Employment); the provision and execution of training courses (Education); and overseas investments in online employment websites (International).

Short Term Case:
SEK has been consolidating since a spike in February amid FY14 HY accounts and results announcements. We have a break-out of recent trading range activity. The (21)momentum indicator shows significant upside with a reading of 104 with reading as high as 147 recorded just back in March. SEK is breaking through recent resistance and the long-term uptrend indicates we are not far off reaching highs of $19.99 which will therefore be the profit target for this recommendation. Competitors in the market have also seen significant capital growth lately most recently with Skilled Group reporting causing a significant spike in price.

Read a recent Wise-Owl research report on Seek Limited (SEK).

Company Website: Wise-Owl

Australian Stock Report

Online Research

Benny Sada

Senior Equity Analyst


Stock Tip: TFS Corporation (TFC)

TFC has strengthened its balance sheet following the collapse of many of its peers, paying down debt, raising fresh capital and sourcing wholesale funding globally. Recently TFC undertook a $67 million placement to allow it to increase its ownership of its plantations.

Demand for Indian Sandalwood oil remains robust. Earlier this year TFC announced a 20-year agreement with Santalis Pharmaceuticals to supply Sandalwood oil at US$4500/kg – a deal worth around $500 million.

Just a few years ago, the price of sandalwood oil was quoted around US$2,125/kg – US$2,300/kg, whilst 12 months prior sandalwood oil was fetching US$1,800/kg.

Along with sandalwood oil’s increasing acceptance as a pharmaceutical input, scarcity of supply is the other major factor driving this price surge.

The harvesting period for sandalwood trees average around 15 years, and TFC started its first harvest on the East Kimberley Sandalwood Project in 1999.

With such a harvesting time, TFC is finally seeing the first major fruits of its labour and investment. The company’s harvest profile is expected to increase in the coming years, although not expected to explode until FY20 onwards.

Until that huge growth in harvesting kicks in, TFC continues to take in establishment fees and management fees.

View additional research from Australian Stock Report.

Company Website: Australian Stock Report

Australian Stock Report

Online Research

Chris Conway

Head of Research and Trading


Stock Tip: Macquarie Group Limited (MQG)

There has been a positive trend in Macquarie’s numbers over the past three financial years, highlighted by a surge in FY14 revenue/earnings. The expectation is that MQG’s numbers will continue to improve in FY15 and FY16, amid an ongoing cost focus and improving market conditions.

Furthermore, MQG is achieving superior ROE compared to most of its global investment banking peers, as can be seen in the table below;

Ticker

Name

ROE (last financial year)

RY CN Equity

ROYAL BANK OF CANADA

18.9

MQG AU Equity

MACQUARIE GROUP LTD

11.1

GS US Equity

GOLDMAN SACHS GROUP INC

11

HSBA LN Equity

HSBC HOLDINGS PLC

8.9

8604 JP Equity

NOMURA HOLDINGS INC

8.9

STAN LN Equity

STANDARD CHARTERED PLC

8.9

UBSN VX Equity

UBS AG-REG

8.2

C US Equity

CITIGROUP INC

6.9

ACA FP Equity

CREDIT AGRICOLE SA

6.4

BNP FP Equity

BNP PARIBAS

6.1

MS US Equity

MORGAN STANLEY

4.5

GLE FP Equity

SOCIETE GENERALE SA

4.2

BAC US Equity

BANK OF AMERICA CORP

3.9

CSGN VX Equity

CREDIT SUISSE GROUP AG-REG

3.6

BARC LN Equity

BARCLAYS PLC

1

DBK GR Equity

DEUTSCHE BANK AG-REGISTERED

0.2

Source: Bloomberg

On the technical front, MQG has traditionally been well supported by the 125-period EMA (green line on chart). The dip below this medium-term value measure followed by a strong bounce, coupled with the recent consolidation thereafter indicates that the stock is well supported and presents what I consider to be a great buying opportunity at current levels. 

Company Website: Australian Stock Report




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