Share tips and stock recommendations for the Australian (ASX) share market – buy, hold, and sell. Michael Gable is an expert guest commentator for the stock market newsletter thebull.com.au.
This post is an extract from the newsletter dated 18 July 2022. You can access the full version of the article HERE.
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We are not as excited about lithium stocks as many others in the market, but they can be good to trade on a short-term basis. In the last few days we have seen MIN fall under its February low before bouncing strongly again. From a charting perspective, this can be very bullish and we are likely to see a short-term recovery in the MIN share price.
Since the share price hit a low in February, it has been meandering higher despite the broader market heading south. Healthcare stocks in general are now finding good buying support recently because of their reliable earnings. CSL’s share price recently pushed through a major resistance level near $280 which means that it should rally back up towards last year’s peak near $320.
The share price has fallen away in the past few months alongside weakness in the broader market. The market may also have been disappointed in the dividend and the outlook statement from Macquarie’s recent FY22 results, but the share price is now showing better value down here. Recent share price action also suggests that a relief rally is underway. We have recently seen some good buying of the dips since mid-June, and momentum indicators are turning positive again.
GMG’s share price has fallen substantially since the start of this year because of rising interest rates and recessionary fears. As a property stock, it remains sensitive to rising rates, but for the moment it appears as though it has been oversold. Recent price action for GMG is showing some good buying support down at these levels and we believe that a relief rally is now underway.
Despite the share price being decimated over the past year, there is still too much risk to the downside. The business continues to lose money and bad debts are on the rise. Competition is also heating up in the sector. With other, better businesses, now looking cheaper because of share market weakness, we cannot see new money wanting to buy ZIP instead of another better alternative.
The share price has recently pushed higher on takeover speculation, but we believe that this is short-lived. Revenue growth and cost control has been disappointing. Alongside this, the broader market does not have the appetite to pay high prices for technology stocks while interest rates are still on the way up.
Michael Gable is managing director of Fairmont Equities.
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