Stock Picks for April 2016

Sirtex Medical Limited

SRX Dividend Details
 
Positive Endorsement and stable first half financials:Sirtex Medical Limited(ASX: SRX) recently announced about positive endorsement from the UK National Institute for Health and Care Excellence (NICE) wherein the latter has issued a new Medtech Innovation Briefing (MIB) stating that NHS doctors and commissioners may consider SIR-Spheres® Y-90 resin microspheres as an alternative to standard therapy with trans-arterial chemoembolization (TACE) or sorafenib for inoperable primary liver cancer. For the first half financial year 2016, SRX recorded an increase of 15.7% in its global dose sales to 5,728 units. Meanwhile, total revenue from sale of goods increased 40% to $112.6 million. Net profit after tax rose 46.9% to $25.9 million, while earnings per share rose 45% to 45.4 cents.
 


Strong dose sales and revenue (Source: Company reports)
 
Reflecting a strong balance sheet, cash and cash equivalents surged 33% to $73.7 million which thereby resulted in a rise in dividend to 20 cents per share for full financial year 2015, an increase of 42.9% over the prior year. Looking ahead, with attractive first half performance the company is on track to meet full year dose sales growth targets. The stock is up 2.94% in the last five days (as at April 05, 2016) in view of the recent update. Based on the above, we rate the stock a "BUY" at the current share price of $30.10
 
 
SRX Daily Chart (Source: Thomson Reuters)
 

Emerchants Ltd

EML Details
 
Signing multi-year agreements: Emerchants Ltd (ASX: EML)recently announced that it has entered into a multi-year agreement with online corporate bookmakers, Hillside (Sports) GP Limited and Hillside (Gibralter) Limited (bet365), to offer their customers the Emerchants payments card for their customers in the U.K. For the first half financial results, revenue increased 108% to $10.6 million compared to same period prior year while gross margin rose 117% to $8.12 million.

 

Performance metrics (Source: Company reports)
 
Net profit for the period stood at $632.9 million compared to net loss of $429 million in year ago period. As a result, EML stock price generated over 131.97% returns in the last six months alone (as of April 05, 2016). We believe that the stock has more room to record gains, and hence recommend a "Speculative Buy" at the current share price of $1.415
 
 
EML Daily Chart (Source: Thomson Reuters)
 

Genworth Mortgage Insurance Australia Ltd

GMA Dividend Details
 
Boosting Capital position: Recently, Genworth Mortgage Insurance Australia Ltd (ASX: GMA)proposed to undertake a capital management initiative for shareholders which involves the distribution of 34 cents per share (or $202 million total) to shareholders in order to return a portion of surplus capital equitably to all shareholders and ensure that the company maintains an efficient capital structure. Along with this, a related share consolidation will also be done which would offer shareholders an earnings per share outcome similar to that of a share buy-back. This initiative contributed to the company's stock price performance which gained almost 5.56% in the last one month (as of April 05, 2016).

 

FY2016 Outlook (Source: Company reports)
 
With a strong dividend yield and a low P/E ratio, we believe that the company could generate further attractive returns and thus we rate it a "BUY" at the current share price of $2.49
 
 
GMA Daily Chart (Source: Thomson Reuters)
 

Austal Ltd

ASB Dividend Details
 
Growing pipeline: Recently, Austal Limited (ASX: ASB) announced that construction of one additional Littoral Combat Ship (LCS) has been funded by the U.S. Navy. Besides, Austal is also recently awarded with a $13.97 million contract as a modification to a previously awarded LCS contract by U.S. Department of Defense. As per this contract, the group would offer engineering and design services to reduce acquisition and lifecycle costs for the Independence-variant LCS. Trading at a decent dividend yield and a moderate P/E ratio, we rate the stock a "BUY" at the current share price of $1.48
 
 
ASB Daily Chart (Source: Thomson Reuters)
 

Liquefied Natural Gas Ltd

LNGDetails
 
Strong performance across business units: Recently, Liquefied Natural Gas Ltd (ASX: LNG)announced that its 100% owned subsidiary, Bear Head LNG Corporation Inc. reached an agreement to purchase additional land from Nova Scotia Business Inc. to support expansion of its proposed LNG facility on the Strait of Canso.
 


Key financial highlights (Source: Company reports)
 
LNG also announced that its 100% owned subsidiary, Gladstone LNG Pty Ltd, owner of the Fisherman's Landing LNG project in Queensland has extended the FLLNG Site agreement for lease with the Gladstone Ports Corporation to March 31, 2017. Given a building pipeline despite commodity pressure, we believe that the stock could recover in the coming months and hence recommend a "BUY" on the stock at the current share price of $0.475
 
 
LNG Daily Chart (Source: Thomson Reuters)
 

Freelancer Ltd

FLN Details
 
Addition of new currencies: Freelancer Ltd (ASX: FLN) recently announced that it has added Chinese yuan as supported currency and also Chinese payment gateways Alipay and UnionPay and a range of new gateways across Europe and Canada. This is driven by the fact that 22% of the 3.3 billion people currently online are from China. On the other side, FLN has also announced addition of six other payment gateways in Canada and other European countries. For full year 2015, Freelancer delivered record results with revenue and gross payment volume higher by 48% and 120%, respectively, from prior year.
 


Performance metric (Source: Company reports)
 
Meanwhile, in the past three months, FLN stock price has corrected around 23.55% (as of April 05, 2016) placing the stock at attractive levels. Thus, we recommend a "BUY" on the stock at the current share price of $1.335
 
 
FLN Daily Chart (Source: Thomson Reuters)
 

Fairfax Media Ltd

FXJ Dividend Details
 
Building new deals to revamp growth track: Fairfax Media Limited’s (ASX: FXJ) regional publications recently signed a strategic commercial advertising deal with TopBetta as the latter will promote Fantasy tournaments across Fairfax Australian Community Media (ACM) network of more than 140 websites. For first half financial year 2016, FXJ reported a revenue of $958.1 million compared to $932.3 million of prior corresponding period.
 


Growing platform (Source: Company reports)
 
Net profit after tax from continuing operations increased to $85.4 million from $82 million. With a strong dividend yield and improving outlook, we rate the stock a "BUY" at the current share price of $0.80
 
 
FXJ Daily Chart (Source: Thomson Reuters)
 

Xero Ltd

XRO Details
 
Improving cash flow: In its recent quarterly cash flow report, XERO Ltd(ASX: XRO) recorded a cash and short term deposit balances of NZ$ 202.7 million as of December 31, 2015. Continued global customer and revenue growth, sustained operating efficiencies, and developing economies of scale in distribution channels and product development have delivered improvement in net operating and investing cash flow.
 


Cash flow analysis (Source: Company reports)
 
Accordingly, Xero has recorded 8.24% gain in the past one month (as of April 05, 2016). XRO has been added in All Ordinaries Index as per the S&P Dow Jones Indices’ March quarterly rebalance updates. Based on positive company fundamentals, we believe there is further room for growth and thus recommend a "BUY" at the current share price of $14.84
 
 
XRO Daily Chart (Source: Thomson Reuters)
 

Nearmap Ltd

NEA Details
 
Positive growth opportunities: Nearmap Ltd (ASX: NEA) reaffirmed its opportunities for growth and high returns in the aerial imaging market in Australia and the U.S. The launch in 2016 of its next generation HyperCamera 2 technology will further enhance customer value proposition against competitors.
 


Strong performance metrics (Source: Company reports)
 
For its first half financial results, NEA recorded total revenue of $14.1 million, an increase of 21% from prior corresponding period. Gross profit rose to $12.3 million from $10.1 million, while EBIT increased to $8.6 million from $7.2 million. The company has a strong balance sheet with no debt and a cash balance of $14.4 million. Based on the above stated positive fundamentals, we rate the stock a "BUY" at the current share price of $0.365
 
 
NEA Daily Chart (Source: Thomson Reuters)
 

Cedar Woods Properties Ltd

CWP Dividend Details
 
Strengthening balance sheet: Cedar Woods Properties Limited(ASX: CWP) recently announced a $6.5 million expansion of the Williams Landing Shopping Centre. This expansion will be financed by a $30 million facility which has a three-year term and expires in February 2019. For first half financial year 2016, net profit after tax increased two times to $18.1 million compared to prior year. The company has a strong balance sheet with total assets at $457.1 million, net bank debt to equity at 25.9% and strong interest cover of 14.6x. With a strong dividend yield and a reasonable P/E ratio, we believe the stock will generate attractive returns based on strong company fundamentals and thus recommend a "BUY" at the current share price of $4.41
 
 
CWP Daily Chart (Source: Thomson Reuters)

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