On Monday I looked at a few fortunate shares that had found favour with brokers and been given buy ratings.
Unfortunately, not all shares on the market have been so fortunate. Three shares that have been given the unwanted sell rating are listed below.
Here’s why these leading brokers think you should sell them:
Cabcharge Australia Limited (ASX: CAB)
According to a note out of UBS, its analysts have downgraded this personal transport solutions provider’s shares to a sell rating from neutral with an improved price target of $2.15. Although the broker notes that its analysis has shown a slowdown in Uber’s app downloads and share of the taxi market, it isn’t convinced that Cabcharge is benefitting as much as the market expects. As a result, it feels that its valuation has become stretched. I would agree with UBS on this one and think that Cabcharge is probably best avoided.
Freedom Foods Group Ltd (ASX: FNP)
A note out of Morgans reveals that it has downgraded this health foods company’s shares to a reduce rating from hold with a lower price target of $5.50. The broker appears to have been left disappointed with the company’s recent update which resulted in its fourth downgrade in as many years. Furthermore, the broker is concerned that the market’s expectations are too high, which could result in more disappointment in the years to come. While I agree that the recent update was disappointing, I think it is worth holding Freedom Foods for the long-term. Especially after its UHT production capacity upgrade.
Wesfarmers Ltd (ASX: WES)
Analysts at Morgan Stanley have retained their underweight rating but increased the price target on Wesfarmers’ shares to $42.00. The broker is reasonably bearish on the retail conglomerate due to its exposure to the slowing housing cycle through its Bunnings brand. It is concerned that when Coles is spun-off it could find its shares de-rated due to the greater focus on Bunnings’ earnings. While I may not necessarily rush to sell shares if I owned them, I wouldn’t be a buyer unless they came down to a more attractive level.
Those shares may be tipped as sells, but these top shares are buy-rated and attractively priced in my opinion.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Freedom Foods Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.