Stock Tips: Expert eyes are on WiseTech and Santos this week
It's no easy gig analysing share prices and company performance but somebody's got to do it. Every week two experts from our Share Tips columnist pool give us their recommendations.
Jed Richards – Shaw and Partners
BUY
WiseTech Global (ASX:WTC) WTC offers strong long-term growth potential, with forecasts suggesting a 22% upside in the next year and more than 100% over five years. Its dominant global position in logistics software and consistent earnings growth make it a compelling buy for growth-focused investors seeking exposure to global supply chain digitisation.
REA Group (ASX:REA) REA continues to benefit from its leadership in digital property advertising. With a projected 12.9% upside in the next year and strong five-year growth forecasts, it remains a high-quality, cash-generative business. Its expanding international footprint and resilient earnings profile support a long-term buy thesis.
HOLD
Macquarie Group (ASX:MQG) Macquarie has delivered strong returns but now trades near all-time highs. Analysts have a neutral rating, citing earnings pressure from its commodities division and limited short-term upside. Hold is appropriate while awaiting clarity on financial results and improved capital market activity.
Ansell (ASX:ANN) Ansell faces margin pressures and a weak technical outlook, but it remains a stable, defensive healthcare stock. Analysts expect modest downside in the short term, but its long-term fundamentals and dividend yield support a hold stance for income-focused investors.
SELL
Woodside Energy Group (ASX:WDS) WDS has underperformed this year, down 25% in 10 months, with limited earnings growth expected in FY25. Energy market volatility weigh on the outlook. Considering the recent spike due to the Middle East conflict and oil price spike, investors can consider moving on.
Monadelphous Group (ASX:MND) Despite a modest 5% upside forecast, MND's growth appears priced in. With limited near-term catalysts and a high payout ratio, the stock may underperform in a rising rate environment. Investors seeking stronger capital growth may consider rotating out.
Chris Haynes – Equity Trustees
BUY
Santos (ASX:STO)
Natural gas player Santos has received an indicative offer of $8.89 from the Abu Dhabi National Oil Company. STO is currently trading well below this offer, suggesting some scepticism around its viability. Nevertheless, the company is expected to experience strong cash flow growth over the next few years as new projects come online.
Pexa (ASX:PXA)
The electronic conveyancing systems developer and provider holds a dominant position in Australia and has been expanding its product offering in the UK over the past few years. The UK conveyancing market is significantly larger than Australia's and, if successful, would drive strong revenue growth over the medium term.
HOLD
Xero (ASX:XRO)
The accounting software heavyweight has announced the acquisition of Melio payment software company. Strategically, that makes sense. However, the acquisition is substantial and dilutive to earnings in the medium term. Integration will take time, which may weigh on the share price.
Cleanaway (ASX:CWY)
The waste management services company has been focused on process improvements at the branch level over the past few years, though these efforts have yet to be reflected in earnings performance. The industry structure remains attractive, and once these improvements are embedded, we expect improved business returns and share price.
SELL
Sigma Healthcare (ASX:SIG)
The pharmacy wholesale and distribution stock has performed strongly over the past year, more than doubling in value. However, the current valuation – at 50 times next year's earnings –is excessive. Time to take profits.
Commonwealth Bank (ASX:CBA)
Strong inflows into index funds have driven CBA to unprecedented valuation multiples. It currently trades at 30 times next year's earnings – higher than many growth companies – despite expected earnings growth in the low single digits. This is unsustainable. Although the sell call has been incorrect for the past 12 months, we are now more than ever closer to a peak.
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