Bell Potter's favoured 10 stocks for private clients

After examining all of our analysts’ buy-rated stocks with a market capitalisation above $1.0 billion, we have identified ten of them which we particularly like over the next 12 months or so for private clients:

ALS (ALQ)

A global company providing analytical testing services for the environmental, food, pharmaceutical and electronic sectors; asset care and tribology testing services for the energy, resources and infrastructure sectors; and analytical testing services for the mining, coal and oil sectors. The company should benefit from a continuing recovery in the overall resources sector and ongoing growth in the food safety and pharmaceutical testing sectors.  

WorleyParsons (WOR)

A global company providing engineering services, project management, and maintenance to the oil and gas, mining and chemicals, and infrastructure (such as water and power) sectors. Medium term earnings should benefit from improving activity levels in the group’s markets as well as the recent restructuring of the cost base.

Caltex Australia (CTX)

A refiner, importer and marketer of transport fuels and lubricants — it owns the Lytton crude oil refinery in Brisbane and the Kurnell import terminal in Sydney and has a network of around 2,000 company owned, franchised or affiliated service station sites. The group is also a major player in convenience retail stores, which are located at its service station sites, and management believes that there is “a significantly untapped opportunity” in this sector.

Challenger (CGF)

A financial group comprising a Life Company, which specialises in retirement income products and annuities and accounts for most of the group’s earnings, and a funds management business. As baby boomers continue to move into retirement, it is inevitable that annuities will become a major and rapidly growing product.

Goodman Group (GMG)

One of the world’s largest integrated industrial property groups with operations centred around development, management and ownership throughout Australia, New Zealand, Asia, Europe, United Kingdom, North America, and Brazil. The long term outlook for industrial and logistics properties is favourable given the continuing growth in ecommerce (or on-line retail sales) and the growing middle class in developing countries.

Lendlease Group (LLC)

An international property and infrastructure group with operations in Australia, Asia, Europe, and the Americas. Its core lines of business are developing, constructing, owning and co-investing in property and infrastructure assets. The international markets offer substantial growth opportunities, especially in the field of urban regeneration— the group’s urbanisation pipeline end value is currently around A$55.9 billion around the world

Link Administration Holdings (LNK)

The largest outsourced administration services provider for the growing superannuation funds industry in Australia; a provider of outsourced administration and transfer agency services to UK asset managers; as well as providing shareholder management, share registry and other services to companies in Australia, the UK and some other European countries. The group is well placed to benefit from further administration outsourcing and industry consolidation given the significant scale and strategic benefits.

Netwealth Group (NWL) 

A specialist investment platform technology provider in Australia that offers investment management solutions to financial intermediaries, who provide financial advice on superannuation and other investments, and self-directed individuals who have chosen not to seek advice. In recent years, the group has been taking market share from the institutional platform providers such as the major banks and other large diversified financial companies. Looking forward, a structural shift within the wealth management sector from large vertically integrated players towards the more independent players should further boost the group’s growth outlook.

Woolworths Group (WOW) 

The group operates supermarkets, liquor stores, discount department stores, and hotels. It is Australia’s largest grocery retailer and accounts for around 38% of the food and liquor retailing market. Management continues to pursue an exit from the petrol business through an IPO or sale and capital management initiatives will be considered in the event of a successful exit.

Primary Health Care (PRY)

The largest private operator of medical centres, the second largest pathology provider, and the third largest diagnostic imaging provider in Australia. The group recently completed an equity raising of around $250 million to invest in medical centres and pathology infrastructure over the next three to five years and acquire seven specialist day hospitals