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Top broker makes FY19 picks

Eagle-eyed readers may have realised that a few industries were missing from yesterday’s FY19 Bell Potter picks article. There were quite a lot of picks, so I thought I’d split the idea list into two articles.

Bell Potter analysts have done work to identify what they think are the best opportunities in each industry and these are the conclusions, with a short reason for why it’s a pick:

Agricultural

a2 Milk Company Ltd (ASX: A2M) – In the short-term Bell Potter thinks China will drive earnings but geographic and product expansion will help as it expands in the USA and the UK.

Synlait Milk Ltd (ASX: SM1) – Receiving CFDA registration for new products and changing the facilities could be supportive moves for its profitable returns.

Select Harvests Limited (ASX: SHV) – Tighter global supply of almonds and economies of scale should see the nut producer improve returns. It should profit from rising almond prices and volume growth over the next seven years.

Discretionary Retail & Professional Services

Premier Investments Limited (ASX: PMV) – Its strong brands which have higher profit margins will be a boost as they grow faster, with Smiggle being set for global growth.

Propel Funeral Partners Ltd (ASX: PFP) – Acquisitions and a hard-to-replicate location footprint will help Propel to be a winner thanks to the long-term rising death rate.

IPH Ltd (ASX: IPH) – Bell Potter believes that the negative earnings surprises from America are over and the intellectual property market will return to normal. Asian growth could really benefit this company.

Industrials

Corporate Travel Management Ltd (ASX: CTD) – Growing the market share through organic growth and continued positive acquisitions should boost profit over time with business confidence at high levels.

Johns Lyng Group Ltd (ASX: JLG) – Exposure to general insurance claims should be a boost due to earnings from Cycline Debbie. Bell Potter thinks there a lot of benefits in the near-term.

Healthcare & Biotech

Mesoblast limited (ASX: MSB) – Bell Potter thinks this speculative biotech company is getting closer to have its first product approved in the US market, which could be a material moment.

Bionomics Ltd (ASX: BNO) – Upcoming results from trials could be a boost to the company and currently represents compelling value according to Bell Potter.

Starpharma Holdings Limited (ASX: SPL) – Product launches and trials could each provide a boost to Starpharma over the coming year.

Foolish takeaway

Biotech is definitely not within my circle of competence, but I do believe that Propel and A2 Milk will be long-term winners, despite the high price tag today. I also like the arguments for IPH, Corporate Travel and Premier Investments.

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Motley Fool contributor Tristan Harrison owns shares of Propel Funeral Partners Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, IPH Ltd, and Premier Investments Limited. The Motley Fool Australia owns shares of A2 Milk. 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.

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