In this section we provide readers with three stocks that have attracted the interest of the broking community or the ‘herd’. Broker recommendations tend to be biased and highly optimistic. We try and breakdown these barriers and give our own honest opinion. It is important to keep in mind that technical analysis is only one part of the investment process and any recommendations do not give consideration to the underlying fundamentals of each business. Treasury Wine Estates (TWE) – $16.62 – Australian wine exports to China are up 63% to $848m helping boost total wine exports in 2017 to $2.56bn. China now makes up one third of Australian wine exports. The next three destinations were the United States, United Kingdom and Canada. Its great news for TWE which has seen sales of Penfolds and Wolf Blass brands rise exponentially. Share in TWE rose roughly 5% on the back of this news. UBS upgraded its forecast. Broker View:  UBS (BUY $17.30) – The broker has upgraded its forecasts with a target price of $17.30. It expects profit margins for 2020-21 for the Asian region to be around 42%. TWE has given guidance for 30%-35%. UBS also believes TWE will accelerate both value and volume share in China over the next 3–5 years. Asia is expected to become the largest contributor to operating earnings by FY19. Unconventional View: We agree with UBS. We have written about TWE on a few occasions because we simply like the stock. This week’s wine exports announcement further highlights this. TWE is a major producer and exporter to China and it’s plainly evident that Chinese wine demand is booming. Rising exports to China, have helped boost the total value of annual Australian wine shipments last year by 15% to $2.56bn. Tariff cuts and lower shipping costs have made Australian wine more competitive and attractive.  China is now well ahead of the US as the biggest buyer of our wines. A phenomenal social and economic boom is underway in China, which is helping drive the huge rise in demand for wines. Thanks to the Free Trade Agreement with China, it’s made it a lot cheaper and easier to export wine. The Chinese are becoming more sophisticated and with that comes the love for wine. Back in 2000 China imported $1.34m of our wine. By 2016 that figure has hit $520m and now its $848m. Despite all this, the Chinese wine market is still in its infancy and has a long way to go. We think TWE’s share price is an accurate reflection of this. On the chart QBE – $10.38 – The Queensland insurer has flagged a FYUS$1.2bn loss on catastrophe claims and another profit downgrade. It will see the insurer swing to a massive loss this year due to natural catastrophe’s which included the California fires and Australian hail storms. The operating ratio will now blow out to 104% compared with guidance of 100%-102% in October. Broker View:  Morgans (HOLD $11.45) – The broker has downgraded its recommendation from Add to Hold. It highlights the face that the recent December Q was a particularly bad one for catastrophic events. As we’ve seen with Suncorp, the recent Melbourne storms had a rather large impact on the company’s bottom line. QBE is no different. Unconventional View: We agree with Morgans. This is the second profit downgrade the company has announced in a short time. It’s a major blow to investor confidence and hampers any effort newly elected CEO Pat Regan to turn the company…

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