Our 'Best Calls to Action' aim to navigate you through the current reporting season by showcasing stocks with strong buying potential. They also offer insights into stocks that might not be ideal for growth right now. These recommendations come from thorough analysis of market trends, financial health, and growth potential, ensuring you access high-value investment opportunities.
Happy to buy today
BHP (ASX:BHP) - Copper Gains and Iron Chains: BHP’s Balanced Brains
Another strong result from BHP, posting an FY24 EBITDA margin of 54%, close to its decade-average of 55% (10 percentage points above its next closest peer). Strong opex performance, with earnings coming in slightly ahead with a final dividend of US74 cents, for an annualised dividend yield of 5.6% fully franked.
We maintain our ADD rating.
Lovisa (ASX:LOV) - FY24 result: Untarnished
There are not many global retailers achieving 17% sales growth and 21% EBIT growth in the current challenging consumer environment, but this is exactly what Lovisa did in FY24. A long period of stellar growth has trained investors to have very high expectations for the business and, while its comparable store sales growth should have been better in FY24, it has continued to deliver and will, in our opinion, continue to do so in the years ahead.
We maintain our ADD rating.
Woodside Energy (ASX:WDS) - A lot to be optimistic about
A strong 1H24 earnings and dividend result comfortably beating Visible Alpha consensus estimates. WDS maintained an 80% dividend payout ratio, for a solid 1H24 interim dividend of US69 cents. Strong inbound interest from potential partners on Driftwood LNG has given WDS confidence it can assemble a strong partnership on the project.
We maintain our ADD rating.
Worley (ASX:WOR) - Delivering margin uplift, against macro headwinds
WOR delivered a solid FY24 result, which came in broadly inline with MorgF and consensus, with EBITA of $751m (+24% YoY), driven by Aggregate revenue growth 18% and solid underlying EBITA margin expansion. The group is flagging a year of more moderate growth in FY25, with the group expecting slower revenue growth but at higher margins.
We maintain our ADD rating.
Trim/Funding Source
Coles Group (ASX:COL) - Executing well
COL’s FY24 result was ahead of expectations with the performance of Supermarkets a key highlight. Key positives: Group EBIT margin rose 10bp to 4.7%; Own Brand growth was 2x the rate of proprietary brands as customers continue to seek value; Coles 360 media income jumped 20.5% with opportunities to grow this higher margin segment over time. Key negatives: Liquor performance was weaker than expected with market conditions remaining challenging; Cash realisation ratio fell to 98% vs 102% in FY23 due to higher working capital.
We downgrade to a HOLD rating.
Guzman y Gomez (ASX:GYG) - Spec-taco-ular start to listed life
GYG’s maiden result as a listed company was strong as we were expecting and ahead of prospectus forecasts, driven by higher than expected comp sales. Importantly GYG has had a strong start to FY25, with its comp sales growth for the first 7 weeks ahead of its comp sales guidance for FY25. We note, the comps GYG has to cycle also get easier from here. Despite the strong start, GYG said it expects to achieve its prospectus forecast (Visible Alpha is already above).
We downgrade to a HOLD rating.
Helloworld (ASX:HLO) - Near term uncertainty
HLO posted a solid 4Q which saw it deliver just under the mid-point of its FY24 EBITDA guidance. The highlights of FY24 were the acquisitions exceeding their investment cases, the group EBITDA margin, materially stronger than expected cashflow and HLO’s strong net cash position. Despite this, when the acquisitions are backed out, in the 2H24, the base business went backwards vs 1H24 and the 2H23.
We downgrade to a HOLD rating.
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