Share tips: experts say keep an eye on these stocks

Wall Street’s bulls hauled Aussie shares higher in November, and these recommendations might help investors decide their next moves.

Wall Street’s bull statue in New York City. Picture: Spencer Platt/Getty Images/AFP

Finance stocks and manufacturers feature strongly among this week’s Share Tips recommendations as the market heads into the final month of the year following a strong November.

Aussie shares finished the month 3.4 per cent higher, not as strong as the near 5 per cent gain in US stocks as Donald Trump won the presidential election, but better than European and Japanese shares, which both fell in November.

Homegrown financial giant Macquarie is rated a “buy” despite its strong rise already this year, while Afterpay’s owner, US-based Block Inc, is also attractive to one of our columnists.

Packaging manufacturer Amcor features prominently, while poker machine maker Aristocrat Leisure and medical device manufacturer Polynovo also get a mention.

Shaw & Partners senior investment adviser Jed Richards:

BUY

Macquarie Group (MQG)

Macquarie is the only Australian bank I am prepared to buy at the moment. While most banks have reported little revenue growth and high costs, the share prices have rallied excessively. Macquarie derives 65 per cent of its income from global operations and this number continues to grow. The bank is well known for the risk assessments and conservative approach with capital, funding and liquidity.

Block Inc (SQ2)

The US is slower than Australia at embracing online and cashless payments. US consumers are finally embracing debit cards for everyday transactions and Block Inc subsidiary Square is well placed to provide the products required by retailers and restaurants to meet this growing demand. The buy now pay later sector has consolidated and the survivors are seeing growth again. Afterpay has been successfully integrated into Block Inc and the financial results have flourished this last year.

Harvey Norman shares have been strong this year. Picture: Britta Campion

HOLD

Aristocrat (ALL)

Global poker machine manufacturer Aristocrat has performed incredibly well in the last six months. With its focus on the US market, the company has increased the profits by 17 per cent to $6.6bn. Even though the shares are up 50 per cent in six months, the company is a leader in its field and demand for its poker machines remains high.

GQG Partners (GQG)

Its share price has fallen 15 per cent recently due to its exposure to Indian conglomerate Adani Group, whose founder Gautam Adani has been charged by the US for bribery offences. This is a short-term reaction and therefore we do not see this as having a long-lasting impact on GQG performance.

SELL

Harvey Norman (HVN)

Harvey Norman’s share price is up 16 per cent in six months and its sales have held up surprisingly well. Some retailers are reporting lower sales growth and we expect this recent trend to flow through to Harvey Norman. We think there are still risks in the economy slowing further, making this is a good opportunity to take profit.

South 32 (S32)

S32 has risen more than 25 per cent recently as the market has been enthusiastic about its copper operations in Chile. The financial performance of the company has been volatile, and I’d suggest we lock in profits while the shares are high. The share price has run ahead of the potential results. For resources exposure, you don’t need to go past BHP while they are low.

Equity Trustees head of equities Chris Haynes:

BUY

Polynovo (PNV)

The company manufactures, and sells biodegradable medical devices in the US, Australia, New Zealand and elsewhere. Its NovoSorb Biodegradable Temporising Matrix is a dermal scaffold for the regeneration of the dermis when lost through extensive surgery, trauma, or burn. The stock has fallen 25 per cent since the end of September. There is a strong but volatile growth path ahead as it expands indications and geographic reach.

Amcor (AMC)

The global packaging business has announced its merger with Berry Inc to deliver significant synergies over the next three years and result in a material upllft in earnings and cashflow per share. It’s a safe bet in a frothy market.

Shaw & Partners senior investment adviser Jed Richards.

Equity Trustees head of equities Chris Haynes.

HOLD

WiseTech Global (WTC)

The company provides software to the logistics services industry and dominates its market akin to Microsoft in the office market. Recent publicity surrounding the founder and then a downgrade to near-term earnings growth will likely keep a lid on the share price in the short term.

BlueScope (BSL)

The Australia steeln manufacturer is also a significant player in the US, and the potential impact of US tariffs is likely to be positive for its US operations. The full impact of these tariffs at this stage is difficult to determine.

SELL

Charter Hall Group (CHC)

The office, retail, and industrial properties company’s stock price is up 54 per cent this year following an improvement in underlying markets. It’s time to look elsewhere and take profits.

Pro Medicus (PME)

This radiology information technology software and services company continues to win new business. The stock price is up 165 per cent this year and it trades on a price-to-earnings ratio of 192 times. It’s a great business but time to take profits as there is little room for a mistakes at current pricing.

Originally published as Share tips: experts say keep an eye on these stocks