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. When assessing these companies we take into account the upside and downside risks and determine whether the company is worth adding to your portfolio. We also look at the company’s fundamentals and thematics to come up with a final decision. Commonwealth Bank (CBA) Company Overview Commonwealth Bank of Australia (CBA) is an Australian retail bank. Its core business is the provision of a broad range of banking and financial products and services to retail, small business, corporate and institutional clients. CBA conducts its operations primarily in Australia, New Zealand and Asia Pacific region. It also operates in several countries including United Kingdom and USA. CBA shares recovered this week on news that it had settled the AUSTRAC money laundering litigation for $700 million. This ends the case of opportunistic class action litigants that could have resulted for not disclosing the AUSTRAC action. Broker View Morgan Stanley (UNDERWEIGHT $64.00) – The broker has a bearish view on the stock. It believes all the big four banks are facing a difficult and challenging period due to regulatory scrutiny stemming from the Royal Banking Commission. The Australian Banks super cycle has come to an end. Unconventional View We disagree with Morgan Stanley. CBA has agreed to pay a $702.5m fine making it the largest civil penalty in Australia’s corporate history. The amount will settle claims it breached anti-money laundering and counter-terrorism financing laws. Whilst the penalty is negative for the bank, the share price rose this week. Markets were expecting the fine to have been in excess of $1bn. CBA had already put aside $375m announced at its trading update. That means the profit impact will be $325m. It’s a mere drop in the ocean in comparison to its $10bn cash profit for this financial year. It’s not a material fine. Secondly the settlement ends any unscrupulous class actions against CBA for not disclosing the AUSTRAC action. If we look at the damage done because of the AUSTRAC case according to an article published  by Christopher Joye from Coolabah Capital Investments, he says “the market was pricing in a circa $5.6 billion penalty.” CBA shares fell 12.9% and bottomed on September 8, compared to the other 3 banks which fell only 1.70%. So part of the reason shares have bounced back is because the penalty was expected to be much higher. The penalty is painful but manageable. It concludes what could have been a lengthy and costly litigation case followed by class actions. CBA can now put this matter in the past, learn from it and move on. CBA is still a highly profitable bank and recently posted an underlying profit rise of 5.8% to $5.11bn in the HY.  It also reported a 6 basis point rise in net interest margins. CBA is still Australia’s leading bank and provides services to 10 million customers and has outperformed its peers over the years. The recent share price route is overdone and presents a buying opportunity for investors. Domino’s Pizza (DMP) Company Overview Domino’s Pizza Enterprises (DMP) is engaged in the operation of retail food outlets and franchise service. The Company holds the exclusive master franchise rights for the Domino’s brand and network in Australia, New Zealand, France, Belgium, the Netherlands, Japan and the Principality of Monaco. The Domino’s brand is owned by Domino’s Pizza, Inc. which operates within the Quick Service Restaurant (QSR) pizza segment…

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