Many experts are speculating that the below mentioned 3 stocks have better outlook and can benefit from the current growth led scenario. Below is a look at these along with an insight on the trading levels:
 

Sonic Healthcare Limited

Acquisition of Pathologie Trier, Germany:Sonic Healthcare Limited (ASX: SHL) has recently acquired Pathologie Trier, which is one of the largest and most respected anatomical pathology practices in Germany and has an annual revenue of ~€20 million. Pathologie’s initial acquisition price was funded in Euro from SHL’s existing debt facilities. 25% of the total purchase price is based on a 3 year revenue-based earnout provision and the majority of the acquisition price will be tax deductible in Germany over 15 years as goodwill amortisation. The initial return on invested capital (ROIC) exceeds SHL’s cost of capital, and the transaction is earnings per share (EPS) accretive by 1-1.5%. Moreover, for FY 18, SHL has reaffirmed its outlook, and expects EBITDA growth of 6-8% on underlying FY 17 EBITDA of A$889 million (constant currency FY 2017 FX rates). The interest expense is expected to increase by 10-15% (constant currency) in 2018. Tax rate is expected at ~25%, excluding one-off US net tax benefit. In FY 18, capital expenditure is expected to be significantly lower due to completion of major infrastructure projects. Meanwhile, SHL stock has risen 14.13% in three months as on July 23, 2018 but is trading at a high P/E of 24x. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 26.520.
 

1H 18 Financial Performance (Source: Company Reports)
 

Cochlear Limited

Released Nucleus Smart App for Android smartphone users:Cochlear Limited (ASX: COH) has released Nucleus Smart App for Android smartphone users, which will offer greater connectivity for people with a Nucleus Sound Processor. As a result, the users can now control their hearing with the Nucleus Smart App from a compatible Android device, and this will allow them to monitor and adjust their settings, view personalised hearing information and locate missing sound processors. COH has added a new control feature called ForwardFocus to the Nucleus Smart App, that allows the users to better control their listening environment by reducing the noise level coming from behind them. Additionally, COH continues to expect FY18 net profit in the range of $240-250m. The company expects the full year net impact of the change in US tax legislation to reduce the net profit by $3-4 million. For FY 18, the company is targeting dividend payout ratio of ~70% of net profit. Meanwhile, COH stock has risen 11.75% in three months as on July 23, 2018  and is trading at a very high P/E (52.5x). COH stock is added to S&P/ASX 50 Index, effective from June 18, 2018. Based on the foregoing, we believe that the stock is “Expensive” at the current price of $ 208.350.
 

Lendlease Group

Chaiman Succession: Lendlease Group’s (ASX: LLC) current Chairman, David  Crawford AO is retiring around 16 November 2018 and Michael Ullmer will become LLC’s chairman. On the other hand, LLC is relocating capital to the international operations after the part sale of the Retirement Living business. The company is launching a telcho infrastructure JV with Softbank Group in the US. Meanwhile, LLC stock has risen 12.57% in three months as on July 23, 2018  and is trading at a P/E of 14.51x. However, based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 20.200 given the property market scenario and slightly high trading level.
 
Thus, we believe that the above stocks are trading at higher valuations and may be reviewed again at a later date when a decent investment opportunity arises.

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