Buy Hold Sell: 5 of the fundies’ favourites

At the start of the year, the fundies with the top performing calls on Buy Hold Sell nominated their #1 stock picks for 2019. In today’s Buy Hold Sell, we ask our panellists for a second opinion on three of these stocks, which include a market darling tech stock, an overlooked gold junior that has just had an earnings upgrade and a fallen angel in the agricultural sector. 

We also ask our panellists for their own #1 pick for the year ahead. Joe Magyer from Lakehouse Capital explains why last year's ASX200 top performer could do it all over again, and James Gerrish from Shaw and Partners singles out another agri stock that could yield a bumper harvest this year.

Tune in to hear five of the fundie’s favourites for 2019...

Transcript:

James Marlay: Welcome to Buy Hold Sell. My name's James Marlay and each year, we ask our guests to give us their number one picks for 2019. Today we're going to run through three of those picks and get two more ideas out of our guests today. I'm joined by Joe Magyer from Lakehouse Capital and James Gerrish from Shaw and Partners. James, let's kick it off with you. Xero. Buy, hold, or sell?

Xero (ASX:XRO)

James Gerrish: Yeah, I've got a hold on this stock. It's been a phenomenal success story in Australia, obviously online accounting business. A couple of key drivers for their growth going forward in Australia from a regulatory standpoint as well as in the U.K. I think it's priced too much for perfection at this stage, so I've got a hold on the stock, but I'd be a buyer at lower levels.

James Marlay: Okay. Joe, Xero. Buy, hold, or sell?

Joe Magyer: It's a buy for us as Xero's gaining share of growing markets, reflecting its pricing power, highly visible revenue stream. A lot of optionality with that business model.

James Marlay: Okay. Next stock, gold space. Actually been a good space lately. Alacer Gold, probably not that well known. Buy, hold, or sell?

Alacer Gold (ASX:AQG)

Joe Magyer:  I'm going to put a hold on this one. Gold isn't really our bread and butter, so I'm just gonna kind of let that one sit out there.

James Marlay: Okay. No view from Joe. You've got a view on Alacer? Buy, hold or sell?

James Gerrish: We’ve got a buy on this stock. It's obviously had a good run up in January. They've got pretty cheap assets. They're exposed over in Turkey. There's been some concern around the delivery on those assets as they ramp up production, they're starting to deliver on that. So it's a buy and it should be trading around the four dollar mark in my view.

James Marlay: Okay. This stock, a little one that's had a bit of a tough year. Disastrous really few years on the ASX. Murray River Organics: buy, hold or sell?

Murray River Organics (ASX:MRG)

James Gerrish: Understatement, James. Now it's been off the boards, it's come back on, it's done a restructure, it's got new management, etc. So this is a speculative buy in my view. It's trading around 12 cents, it's got conservative NTA of about 16 cents. It's got a pile of debt, so it carries about 70 million dollars worth of debt. So the management team now is starting to deliver on that, but if they do, it'll be multiples of where it is trading at now. But it obviously has risks involved as well. So a speculative buy at this stage, James.

James Marlay: Okay Joe. Speculative buy there. Can he get you over the line? Buy, hold, or sell?

Joe Magyer: No I'm gonna go sell. I think it's very cheap for very good reasons. With the balance sheet, underlying assets aren't all that attractive. Makes me wonder about the NTA.

James Marlay: Okay. Well this is your chance to pitch your idea for 2019. Can you sling us a stock that you think looks good for the year ahead?

Afterpay Touch (ASX:APT)

Joe Magyer: Sure I'm gonna say Afterpay Touch. Business is going great guns in the U.S. I think there's a decent shot they might have more users outside of Australia by the end of 2019 than they have here.

James Marlay: Okay. James, your chance. What have you got for us for 2019?

Costa Group (ASX:CGC)

James Gerrish: Yeah I'm gonna go with something that's been smacked in the start of this year. So Costa Group, large fresh fruit and vegetable grower and distributor here in Australia. They came out earlier in the year with a downgrade its earnings, I think that was more cyclical rather than structural. The markets crimp their expectations on margins, and the stock’s dropped as a result of that. So, around five dollars, Costa Group's a buy to me James.

James Marlay: Okay. Well there it is. There's the verdict on the fundie’s favourites for 2019.