Are these 5 Favored Tips a buy for 2018 - Aristocrat Leisure, BHP Billiton, Origin Energy, etc.

Year 2018 is almost here, while market experts and brokers are already working on the strategies with regards to investment ideas and themes to punt on in the new year. For instance, the resources sector is gaining traction and is expected to deliver upside earnings at the back of favorable commodity prices. Following is an insight on five diverse stocks that have been talked about these days.
 

Aristocrat Leisure Limited

ALL Details
 
Acquired Plarium Global Limited: Aristocrat Leisure Limited (ASX: ALL) has been gaining a lot of attention based on its digital exposure with improving outlook and high return on equity. The group lately completed the acquisition of Plarium Global Limited, an Israeli-based social gaming company, after obtaining all necessary regulatory and other approvals with respect to its agreement. Moreover, the acquisition is expected to increase the company’s presence in the high-growth mobile gaming market and substantially increase the Digital segment’s pro forma earnings contribution to ALL’s overall performance. Further, the acquisition is expected to be EPSA accretive in year one while key management personnel have remained in the business. As a result, ALL stock has risen 9.60% in three months as on November 21, 2017. While the group seems to benefit from the leisure industry outlook, the forward price to earnings level is high, and we believe the stock is still “Expensive” at the current price of $23.19    

       

ALL Daily Chart (Source: Thomson Reuters)
 

BHP Billiton Limited

BHP Details
 
Poised for sector-driven performance:With strong global growth in mining sector, BHP Billiton Limited (ASX: BHP) seems to be poised for momentum at the back of improving business trends, capital allocation management, project pipeline and returns. BHP has lately secured a 150-day extension ending on 20 April 2018 from 12^th Federal Court to negotiate a settlement of the Public Civil Claims due to the Samarco mine disaster in 2015. Samarco, Vale, BHP Brasil and the Federal Prosecutors had jointly requested for the extension. The Preliminary Agreement had outlined the process and timeline for negotiation of a settlement of the BRL 155 billion (approximately US$47.6 billion) and BRL 20 billion Public Civil Claims (approximately US$6.1 billion) related to the dam failure. The agreement also provided for the appointment of various experts to advise the Federal Prosecutors. Moreover, during the 150-day extension period, the interim security arrangements will be provided to the 12th Federal Court and the current suspension of legal proceedings and injunctions under the Preliminary Agreement will remain in place as before. Meanwhile, BHP stock has risen 11% in six months as on November 21, 2017 and is trading at a reasonable P/E level compared to peers. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $27.60



BHP Daily Chart (Source: Thomson Reuters)
 

Origin Energy Limited

ORG Details
 
Higher 2P Reserves for the Waitsia gas field:Origin Energy Limited (ASX: ORG) has informed that the review and evaluation undertaken by RISC has concluded that 2P Reserves for the Waitsia gas field were 78% higher than previous estimate as at 30 June 2017. This shows substantially higher recoverable hydrocarbons and additional production potential from the excellent quality conventional reservoirs in the Kingia and High Cliff Sandstones. Moreover, the additional reserves identified are more than double the reserves required for the project, which can significantly increase the near-term field production and longer field life. Additionally, the recent flow tests at Waitsia-3 (50 MMscf/d) and Waitsia-2 (39 MMscf/d) were great and ORG is targeting to flow test Waitsia-4 before the end of November.
 

Independent (RISC) estimate of Reserves and Contingent Resources (Source: Company Reports)
 
Meanwhile, ORG stock has risen 12.53% in three months as on November 21, 2017 with favorable prices for oil and metals that are supporting the energy and materials indexes. Oil stocks moved up on expectations that OPEC and other producing countries would extend output cuts. We give a “Hold” recommendation on the stock at the current price of $8.39



ORG Daily Chart (Source: Thomson Reuters)
 

Woolworths Limited

WOW Details
 
Managing concerns:Woolworths Limited (ASX: WOW) had recently announced its first quarter 2018 sales results wherein Australian Food sales were up 4.7%, Endeavour Drinks sales surged by 3.8% to $2.0 billion with comparable sales up 3.3%. There was a 4.1% rise in hotels sales while comparable sales rose by 4.1%. Petrol (discontinued) sales for the quarter of $1.2 billion were 4.6% higher than in year 2016 at the back of rising average fuel sell prices. The recent result, in a way, maintains confidence around the opportunities available to the group through food margin, top-line in grocery and Big W turnaround.
 

Australian Food Performance (Source: Company Reports)
 
Meanwhile, WOW reaffirmed its commitment to ensure that the human rights of all workers in the Group's operations and supply chains are protected. Moreover, WOW has withdrawn the resolutions, which were requisitioned by 106 shareholders, and sponsored by the Australian Centre for Corporate Responsibility (ACCR). Given the upward trend and better performance than Coles in the past, we put a “Buy” recommendation on the stock at the current price of $26.10



WOW Daily Chart (Source: Thomson Reuters)
 

AGL Energy Limited

AGL Details
Agreed to sell its digital metering subsidiary to Ausgrid:AGL Energy Limited (ASX: AGL) is one of the most favored stocks in the market and is said to be resilient to the challenges in the existing environment. The group has recently agreed to sell its digital metering subsidiary, Active Stream Pty Limited, to Ausgrid. The transaction is expected to be completed in early December. After the sale to Ausgrid, Active Stream will continue to provide digital metering services to AGL on a non-exclusive basis. Moreover, AGL expects to record a post-tax profit on sale of approximately $25 million in its accounts for the six months ended 31 December 2017. This profit will be reflected as a positive significant item, which means there will be no benefit to underlying profit. Meanwhile, AGL stock is trading at a high P/E and we believe that any dip in the stock price can be watched for. We give an “Expensive” recommendation at the current price of $24.19



AGL Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.