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 31 August 2020. You can access the full version of the article HERE.
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Travel stocks are starting to move higher again as we pass the worst of the lockdowns and get closer to the economy reopening. When looking at the price chart, QAN shares appeared to have bottomed out and are now set to recover somewhat from these lower levels.
This computer software company has had its revenues temporarily impacted by COVID-19, but their earnings are set to recover strongly. The share price appears well supported on the charts and we believe that it should now start to move higher again.
In June, we saw the XRO share price surpass the February peak. It then spent the next several weeks consolidating that move, sitting on top of the February high. That was a bullish sign and now we are seeing XRO push to a new high again. This means that we are confident that the shares should continue to trend higher from here.
Aristocrat has a resilient business which is still doing well despite restrictions due to COVID-19. The company is also leveraged to a recovery as economies start to reopen. Because of this, we are already seeing the share price of Aristocrat to recover and we believe that this trend will continue.
Telstra disappointed the market with their recent full year results. We believe that the market has been too optimistic about Telstra’s role in a “post-COVID” world and the reality is setting in that they face too many challenges. As such, the share price is likely to continue deteriorating from here.
AGL’s share price took a hit after the release of their full year results, and they continue to look weak on the share price chart. Margins and earnings are declining for the company and this is likely to weigh on the share price.
Michael Gable is managing director of Fairmont Equities.
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