It has been a busy week filled to the brim with results, sales updates, and annual general meetings.
This has kept many of Australia’s top brokers busy adjusting their discounted cash flow models and recommendations accordingly.
Three that have come out favourably are listed below. Here’s why they have been given buy ratings:
BHP Billiton Limited (ASX: BHP)
According to a note out of Citi, its analysts have retained their buy rating and $37.50 price target on this mining giant’s shares following the announcement of its special dividend and share buyback. Citi believes that the buyback could be as much as 5% accretive to earnings in FY 2019 and 3% in FY 2020. In addition to this, the broker believes that BHP Billiton will be able to increase its shareholder returns in the future due to its net debt position falling inside its target range. I agree with Citi on BHP Billiton and think it is the best option out there for investors looking to gain exposure to the resources sector.
BWX Ltd (ASX: BWX)
A note out of Goldman Sachs reveals that it has retained its buy rating but reduced the price target on this personal care products company’s shares to $4.20 after it added more colour to its FY 2019 guidance at its AGM. According to the note, although the broker isn’t thrilled to have had to downgrade its earnings estimates for BWX for the third time in the space of seven months, it still sees value in its shares at these levels. Goldman expects BWX to achieve sales of $163.1 million and earnings per share of 18 cents this year. While I do agree that its shares look to be good value, I don’t have a lot of confidence in BWX’s ability to forecast sales accurately. In light of this, I’m going to hold fire until at least its half year results.
Kidman Resources Ltd (ASX: KDR)
Analysts at Ord Minnett have retained their (speculative) buy rating and $2.80 price target on this lithium miner’s shares after it announced a lithium hydroxide supply agreement with Japan based Mitsui. According to the note, the broker appears pleased with the deal and believes that, combined with its Tesla offtake agreement, Kidman now has about 30% of its funding requirements covered. If lithium prices remain favourable then I think Kidman is well-positioned to generate meaningful cash flows from its Mt Holland project. But that is a reasonably big if at this point, making it a risky investment option.
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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 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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