Blackmores Limited, Smartgroup Corporation Ltd and STW Communications Group Ltd: Buy, Hold or Sell?

Blackmores Limited (ASX:BKL), Smartgroup Corporation Ltd (ASX:SIQ) and STW Communications Group Ltd (ASX:SGN) offer investors a mixed bag of opportunities.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The following three companies are amongst the leaders in their respective fields, but right now at their current share prices should you buy, hold or sell them?

Here are some clues based on the view of one of Australia's leading fund managers, Wilson Asset Management which is the manager of listed investment company WAM Capital Limited (ASX: WAM).

1. Blackmores Limited (ASX: BKL)

It's been a great run for shareholders in Australia's leading vitamin producer with the share price of the health products group soaring 170% in the past year. The long-term performance of the company is equally impressive with Blackmores achieving a ten-year total shareholder return of 24.5% per annum.

Wilson's began purchasing stock in Blackmores around $47 a share so the fund manager has already captured much of the recent upside, however, they do see further earnings momentum particularly thanks to growth in Asian markets which could keep the share price climbing higher.

Trading on a price-to-earnings (PE) ratio of roughly 30x and with earnings per share growth of around 60% the current price level of $74 could be justified

2. Smartgroup Corporation Ltd (ASX: SIQ)

Operating in the salary packaging and novated lease sector, Smartgroup has been listed for less than 12 months so it is likely still flying under the radar of many investors

Wilson's purchased stock in the initial public offering at $1.60 and after a rocky start – which wasn't helped by lingering concerns over potential regulatory changes – the stock has recently rallied to a high of $2 a share.

The fund manager views the government sector trend to outsourcing as compelling and coupled with acquisition opportunities this should provide positive earnings momentum.

Trading on a PE of 10.5x and with forecast growth of 16%, the stock looks like it could still be good value.

3. STW Communications Group Ltd (ASX: SGN)

Despite owning a suite of wide-ranging and highly regarded advertising and marketing agencies, STW has struggled from being caught in the headwinds buffeting media companies such as free-to-air television.

Wilson's explained that it got caught out by the severity of the decline in business fundamentals and exited its STW position back in February at 74 cents per share.

Despite the share price continuing to decline – it is currently trading at just 57.5 cents, given the weak earnings outlook this might be one stock to continue avoiding.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »