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Leading broker names 2 shares to buy and 2 to sell

I find it quite interesting to read some of the latest investment tips from brokers as they are often privy to high-quality research from their teams.

One of the most recognisable names and faces in the industry is Julia Lee from Bell Direct, who often appears on Sky Business. She shared with The Bull two ideas to buy and two to sell:

Buy

Mayne Pharma Group Ltd (ASX: MYX)

The generic drug business is attractive to Ms Bell because growth in the second half of the year picked up, meaning FY19 could be another bumper year. Revenue for the core generic medicine segment grew by 28% in the second half, as well as the underlying gross profit margin increasing.

She also pointed to additional new product launches that could create extra revenue avenues. However, US regulation is a major risk for Mayne.

Northern Star Resources Ltd (ASX: NST)

Ms Bell thinks the gold price is due for a recovery because of sustained weakness, Northern Star looks good in her opinion.

The purchase of the Pogo mine at a time of low gold prices could turn out to be a shrewd move with good timing.

Sell

Estia Health Ltd (ASX: EHE)

The recently-proposed Royal Commission into the aged care industry could expose quality issues in the sector. The most likely outcome is an increase in costs with higher wage costs and an increasingly difficult task of growing profit.

Ms Bell said she wouldn’t want to hold any of the aged care operators during a Royal Commission.

BWX Limited (ASX: BWX)

The recent end of Bain Capital’s interest in acquiring BWX is going to suck the premium out of the share price and a turnaround could take a year or even two years according to Ms Bell.

Changes to the management could be disruptive and we recently saw John Humble selling shares.

Foolish takeaway

I agree with her on Estia, but I’m not sure about her negative view about BWX. If revenue and earnings per share (EPS) keep growing then positive sentiment might return quite quickly and it has a forward p/e ratio of less than 15.

Another share that top analysts are very interested is this exciting growth share that’s expanding into Asia.

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Motley Fool contributor Tristan Harrison owns shares of BWX Limited. The Motley Fool Australia owns shares of and has recommended BWX 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.

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