Buy, hold, sell: Aristocrat Leisure, Brambles, Wesfarmers shares

S&P/ASX 200 Index (ASX: XJO) shares are down 0.1% as negotiations between the US and Iran continue today.

According to analysts at Trading Economics:

Over the weekend, both sides exchanged proposals seeking revisions to a draft deal that would prolong the ceasefire and reopen the Strait of Hormuz, though it remained unclear whether meaningful progress had been achieved.

President Donald Trump also reaffirmed his demand that Iran halt its nuclear program and fully restore the strait’s status as an open international shipping route.

ASX 200 tech shares are rising strongly today, up 5%, followed by materials and mining stocks, up 1%.

Meanwhile, on The Bull, John Athanasiou from Red Leaf Securities has revealed his ratings on three ASX 200 giants.

Let’s take a look.

Aristocrat Leisure Ltd (ASX: ALL)

The Aristocrat share price is $50.20, up 0.2% today, and down 12.3% in the calendar year to date (YTD).

John Athanasiou from Red Leaf Securities has a buy rating on Aristocrat shares this week.

He explains:

The business is transitioning from a traditional gaming supplier into a global digital entertainment platform, with its social gaming division driving much of the growth momentum. This improves margins, lifts earnings visibility and reduces cycles over time.

Land-based gaming remains a stable cash generator, supporting re-investment and shareholder returns.

Management execution has been consistently strong, with disciplined capital allocation and successful integration of acquisitions.

The stock trades at a premium valuation, but, in our view, it’s justified by return on equity, offshore growth exposure and a structural earnings upgrade story that continues to play out.

Wesfarmers Ltd (ASX: WES)

Wesfarmers shares are $50.20, down 0.2% today, and down 3% YTD.

Athanasiou put a hold rating on Wesfarmers shares this week.

He comments:

The industrial conglomerate’s performance is supported by a diversified portfolio across retail, industrials and chemicals.

The group’s strength lies in disciplined capital allocation and its ability to generate steady returns across cycles. However, in our view, near term growth is likely to remain subdued as consumer spending normalises and retail conditions become more selective.

Hardware giant Bunnings continues to provide earnings stability.

The stock’s valuation appropriately reflects its quality profile, leaving limited re-rating potential in the absence of a stronger macro tailwind.

Wesfarmers remains a reliable long term holding, but it’s best viewed as a steady compounder rather than a growth catalyst.

Brambles Ltd (ASX: BXB)

The Brambles share price is $16.68, up 0.7% today, and down 27% YTD.

Athanasiou has a sell rating on Brambles shares this week.

He notes a steep decline in the ASX 200 industrial share’s valuation from $22.10 per share on 15 May to $16.68 today.

He says:

This supply chain logistics giant has moved from a premium defensive compounder to a more challenged operational story following recent earnings and sales revenue downgrades.

Disruptions in its United States pallet pooling network have exposed execution issues, resulting in higher costs.

While the CHEP business model remains structurally sound, short term performance is weighed down by operational inefficiencies and inflationary pressures.

The downgrade cycle has shifted sentiment, with the market now questioning the sustainability of mid term growth expectations.

Until execution stabilises and margins recover, Brambles lacks the earnings momentum required to justify a premium multiple, leaving risk skewed to the downside, in our view.

The post Buy, hold, sell: Aristocrat Leisure, Brambles, Wesfarmers shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.