Which stocks are among Bell Potter’s hot tips for FY 2020?
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Bell Potter has released its Analyst Outlook for the next financial year and revealed the stocks it predicts to rise in the months ahead.
Among agriculture stocks it predicted Select Harvests’ (ASX:SHV) recent good run will continue. The company made a $20m profit from selling almonds.
While admitting almond prices were a significant factor, the stockbroker thought prices were currently at the bottom of the cycle. It also rated large cap Synlait Milk (ASX:SM1) and Elders (ASX:ELD).
Anyone who has organised a funeral would know it is expensive. Bell Potter believes this is a good thing for Propel Funeral Partners (ASX:PFP), which has 119 locations including 28 crematoria and 9 cemeteries built up over several decades.
It predicted the industry would consolidate further, be boosted by the aging population and be protected by high barriers to entry.
Among the health picks were burns-focused Avita Medical (ASX:AVS) and biopharmaceutical play Pharmaxis (ASX:PXS). Bell Potter noted both companies were in the clinical trial stage and well funded for the months ahead.
In the tech sector investors are caring about profitability once more and Bell Potter has taken note. Nevertheless, the goal was, “to find good quality tech stocks with strong growth outlooks that are currently trading on forward PE ratios of around 25x or less”.
The picks were mid-cap software stock Integrated Research (ASX:IRI), large cap Technology One (ASX:TNE) and athlete tracking manufacturer Catapult Group (ASX:CAT).
However, only Catapult was tipped to rise substantially — Bell Potter tipped a 25 per cent rise for the company. The stockbroker liked that Catapult was trading at an annualised recurring revenue multiple of just 3X and anticipated positive free cash flow within 24 months.
The mining industry is the largest on the ASX so any en masse stock analysis would not be complete without it. Nickel Mines (ASX:NIC) was tipped to rise from 42c to 93c and Pantoro (ASX:PNR) to rise from 20c to 35c now that they are in the production phase.
Earlier this month oil explorer FAR (ASX:FAR) had $95m in short interest against it. But FAR was tipped to early quadruple to 22c (from 6c). Even though it won’t produce first oil until 2022, Bell Potter think investors will soon realise its potential. The operation will initially produce 100,000 barrels of oil per day at just stage one.
Base metals explorer Metals X (ASX:MLX) was another tip — expected to rise to 45c from 26c at present. While Metals X is not profitable, Bell Potter trusts in the company’s plan to turn things around and the potential for copper prices to rise.