Stock Tips (PPS, CAJ, FLT & CGF)

Stock tips are collated every month from different stockbrokers and financial planners around Australia. The aim is to have a variety of aggressive traders and conservative investors.

Feel free to ask a question in the comments below.


Online Research

Simon Herrmann

Private Client Advisor

Stock Tip: Praemium Ltd (PPS)

Price Target: $0.35c

Praemium Ltd (PPS) is an Australian software company offering investment administration and financial planning technology platforms for clients in the financial services industry. The company operates in Australia, the UK, Jersey and Hong Kong.

PPS was founded in 2001 and listed on the ASX in 2006. The company currently serves more than 700 clients covering $80bn in assets. The Separately Managed Accounts Technology (SMA) is Australia’s market leader and one of the fastest growing discretionary platforms in the UK.

CATALYSTS: PPS is in transition to become a self-funding company and is debt free.

The company experienced historic revenue growth of ~12% p.a. over the past three years and operating cashflow has improved 225% y-o- y.

One of its long standing customers extended its contract for a further five years with a minimum contract value of $3m per year (FY14 Revenue ~18m).

The company has launched a retail product targeting SMSF which may be a catalyst for long-term growth.

HURDLES: PPS has been historically reliant on external capital to finance operations and there is no guarantee existing income levels will be sufficient to support planned growth initiatives. The cost base expanded by 22% last FY largely driven by an increase in head count.

These large cost investments have absorbed revenue growth and there is no guarantee that these structural changes will result in increased margins. Praemium’s share register is relatively fragmented and could leave the Company open to takeovers below the fair value of its securities.

INVESTMENT VIEW: PPS offers profitable exposure to the wealth management software industry.

We are attracted to its revenue growth trajectory and funding position. Cost investments across the business have been largely completed and PPS can now focus on maximising leverage in future operations. We issue a ‘speculative buy’ recommendation.

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Australian Stock Report

Online Research

Chris Conway

Head of Research & Trading

Stock Tip: Capitol Health Ltd (CAJ)

Capitol Health is a stock we know very well, having slapped a long-term BUY rating on it way back when it was trading it at $0.30.

We have also traded the stock numerous times over the journey, most recently for a profit in December last year.

The underlying story remains intact and we believe this to be a strong business, capable of providing the support required for the growth of the company's highly scalable business model.

A supportive regulatory environment and the attractiveness for multiple stakeholders - patients, radiologists and referrers - should also see CAJ continue to grow rapidly, both organically and through acquisitions.

On the technical front, the price action is providing us with an opportunity to be buyers once more, as long as the $1 round number can be cleared.

We would look to buy through $1.01, targeting a move into $1.20.

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Full-Service Stockbroker

Luke Pilkington

Client Advisor

Stock Tip: Flight Centre Travel Group Ltd (FLT)

FLT is currently trading at $36.97 after falling 33.6% in the past 12 months.

Flight Centre Travel Group Limited (FLT, formerly Flight Centre Limited) is engaged in the travel agency industry. The Company provides a complete travel service for leisure and business travellers in Australia, New Zealand and throughout other areas of the world.

Fundamentally, the franchise network is being revamped and expanded and now has over 2,500 stores worldwide.

Its international business has added greatly to the bottom line, with overseas EBIT almost tripling in the past four years. In line with JPMorgan’s analysis, I believe the price fall in the past 12 months is overdone and the with the support level of $33.00 holding in recent weeks, this will form a base for the stock to recover back towards the 200 DMA at $42.50.

The fundamentals of this company are still as strong as ever and this stock will look to push higher in the short term, especially as the Australian travel agent now trades at a 17% discount to the strengthening S&P/ASX 200.

With the hunt for yield on in these low interest rate environments, FLT is offering a modest, yet impressive dividend yield of 4.11% p.a.

I remain bullish on Flight Centre and believe there is a 14.95% upside potential in the short term to my target price of $42.50. Buy.

Company Website: Pilkington Trading

Market Matters

Online Stock Report

Shawn Hickman


Stock Tip: Challenger Ltd (CGF)

Editor's Note: Instead of a research report, Shawn prefers to simply state what he is currently doing in the market.

We are experiencing a solid earnings reporting season with over half of companies beating the markets estimates of EPS (earnings per share). The combination of solid corporate news and historically low interest rates is combining to push the ASX200 to levels not seen since mid-2008.

Challenger Ltd (CGF) at $6.45 – The population getting older and needing income to live we all know is both a fact and a problem in Australia. This area is Challengers growth, yet the stock is priced as if its earnings are about to get hammered.

I think the markets wrong. Buy with stops under $6.20 – see chart.

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