Why Seek, Ramsay Healthcare and BHP are rated buys by our experts

An unloved ASX-listed company is struggling as the jobless rate hits its highest level in years, but the bad news appears priced in.

BHP shares have been sold down amid iron ore price pressure. Picture: BHP

In a week where Australia’s jobless rate rose to 4.2 per cent, employment advertising company Seek caught the eye of both of our share tips columnists.

Seek’s shares have slumped almost 20 per cent in value since March, but it is tipped to weather rising unemployment that already sits at its highest level since January 2022.

The company earned a “buy” and a “hold” recommendation from our stock market specialists, while BHP and Ramsay Healthcare also were rated as buys.

However, the Commonwealth Bank is once again given a “sell” recommendation as its record high share price keeps its in the stratosphere compared with other banks in Australia and overseas.

Another market darling, JB Hi-Fi, also may be primed for some profit taking.

Chris Haynes, Equity Trustees head of equities

BUY

Seek (SEK)

New job ads on Seek’s Australian website are down around 20 per cent over the last year and likely to be down again in financial year 2025. Its recent result was awful, with low volumes flowing through to earnings and the outlook for the next 12 months. The share price has factored in a lot this weakness and for those with a longer term horizon these levels represent good buying.

Chris Haynes, head of equities at Equity Trustees

James Hardie (JHX)

James Hardie is the pre-eminent siding, or wall cladding, supplier in the USA and Australia. Recent weakness in the USA housing market has seen the stock sold down to very attractive levels. The company has a long runway of growth in the USA as it continues to take market share off vinyl siding. It only trades at a price earnings ratio of 20 times which is not expensive for a growth company.

HOLD

Netwealth (NWL)

Netwealth offers portfolio and administration services to financial advisers. It continues to take market share in a growing market. The recent result delivered 20 per cent profit growth and the share price has run up in line with that growth. Pricing is on the expensive side at 50 times earnings, so it’s time for a breather.

Goodman Group (GMG)

Goodman Group engages in the development, owning, and management of industrial property and business space. The stock has delivered double-digit earnings growth for the last 10 years. It has an exciting future ahead as it develops and builds out global date centre demand. Pricing is on the slightly expensive side at 28 times next years’ earnings.

SELL

Commonwealth Bank of Australia (CBA)

CBA is a great franchise and well managed. It controls around 25 per cent of the mortgage market and is the leading retail bank in Australia. Price is the issue. Paying three times book value is expensive and no other bank franchise globally is priced anywhere near this multiple of book value.

QBE (QBE)

A global insurance business that has had a good run on the back of rising insurance prices. Insurance prices look to have peaked and hence it probably means the share price has as well.

Jed Richards, Shaw and Partners senior investment adviser

BUY

BHP (BHP)

BHP is the leading global resource company. The share price has slipped excessively due to the iron ore price at the moment. As a low cost producer, I still expect the result on August 26 to be strong.

Ramsay Healthcare (RHC)

The company is a global provider of healthcare services and operator of hospitals and day surgery facilities. We see the potential for Ramsay to receive another takeover bid higher than the $88 per share received in 2022. In any event, the company continues to be a market leader in Australia and in each of its respective geographies.

HOLD

Woolworths (WOW)

The supermarkets find themselves in the unenviable political crosshairs ahead of a tight election. They are accused of price gouging when the cost-of-living pressures are extreme. Their latest result was disappointing, but much of this was already priced in. Woolworths is trading at a significant discount to historical norms, and provides good defensive exposure if markets weaken.

Seek (SEK)

While unemployment is expected to tick higher over the coming months, Seek has the ability to pull levers to driver further growth over the next 12 months. The company is the clear market leader across multiple advertisement channels, with around 30 per cent market share.

Shaw and Partners senior investment adviser Jed Richards

SELL

JB Hi-fi (JBH)

JB Hi-Fi has outperformed the broader market over the last 12 months on the back of a stronger-than-expected consumer. We think there are still risks in the economy slowing further, making this is a good opportunity to take profit.

South 32 (S32)

The mining company has fallen recently after writing down the value of its proposed Hermosa project in the US to the tune of $1.9bn. Due to a series of cost increases and delays it has become a poor performer. We prefer BHP shares for our mining exposure, especially while they are low.

Originally published as Why Seek, Ramsay Healthcare and BHP are rated buys by our experts