Cleo Nanni, NOVUS CAPITAL
Newcrest Mining (NCM)
Australia’s biggest independent gold miner is also a top 10 global producer, with market capitalisation of $16.5 billion. It has a total resource of 70.6 million ounces of gold and 9.18 million tonnes of copper. Newcrest management has proven ability to find, build and operate world-class gold mines with low gearing, a strong balance sheet, good profit and cash flow growth and multiple growth options. I strongly believe the gold price will continue to rise and this company is a must for any portfolio.
Red Fork Energy (RFE)
An oil and gas explorer and producer, with holdings in the US state of Oklahoma.
Red Fork is targeting unconventional coal bed methane and shale gas and conventional oil and gas formations. Recent flow tests significantly upgraded production capacity of East Oklahoma shale. Potential (stabilised) daily flow rates of gas was upgraded to 300,000 cubic feet per well – up from 100,000 cubic feet. Reserve potential has been significantly upgraded following these tests.
This blood products group is still my favourite stock. It’s a core portfolio stock, but also offers a terrific opportunity to trade share price dips. CSL specialises in biologically-based health care products and supplying blood products and vaccines. CSL continues to go global with new product stgelopment activities. Hold your core position, but always have some cash aside to trade on the dips.
BHP Billiton (BHP)
The world’s biggest diversified resources group offers a portfolio of high quality assets. Core activities include producing and distributing minerals, mineral products and petroleum. As with CSL, this company is a must for all capital growth portfolios. BHP also continues to provide great trading opportunities over and above long-term growth potential.
Tabcorp Holdings (TAH)
Operates casinos, wagering and gaming. Tabcorp’s first half 2009 result was disappointing. Regulatory risks hang over its Victorian wagering licence and Star City casino numbers were weaker. A risk to earnings and potentially losing another major licence makes me a seller.
An Australian agribusiness involved in rural and financial services and commodity management. Since the company’s profit downgrade in February, AWB’s share price has been punished. Also, it has a $1.2 billion debt facility due to mature in May. I would not wait for first half company earnings in the next few weeks. Sell and wait for a clearer view of the company’s trading and capital positions.
Mark Goulopoulos, TOLHURST
QBE Insurance Group (QBE)
The considerable fall in QBE’s share price since its interim profit result has been overdone. The group remains one of the best-managed insurers in the world, and pro-active management is likely to take advantage of the global financial crisis by buying strong businesses at attractive prices. New acquisitions will drive future profit growth.
This engineering services company is positioned to benefit from global stimulus packages to the infrastructure industries. Recent Chinese statistics indicate that while economic growth has slowed, fixed asset investment remains robust. This should lift resource and energy demand over the medium term, particularly when the US and European economies begin to recover. The company recently won several big contracts, which will drive solid profit growth through 2009 and 2010. WorleyParsons trades at an extremely low valuation at a March 13 price of $16.43 soon after the market opened.
ASX Limited (ASX)
Despite its monopoly position and the protection it affords, the ASX is not immune to massive falls in equity markets. Lower trading volumes and a substantial fall in new IPO activity will result in lower revenues. Notwithstanding these headwinds, the stock remains an excellent portfolio holding for the longer term.
National Australia Bank (NAB)
The National has been the second worst performing bank of the big four in the past 12 months, primarily due to concerns over its UK and US exposures. On valuation, it’s now the cheapest of the majors as concerns are probably factored into the share price. Any recovery in the financial sector is likely to see NAB outperform its peers, although this will come with the added risk of offshore exposures.
The often-touted defensive qualities of Amcor’s business model related to packaging have failed to materialise in this economic downturn. Profits are falling and the share price has been disappointing in both bull and bear markets. Simply, much better opportunities exist elsewhere in the market.
ANZ Banking Group (ANZ)
The banking sector continues to struggle under the weight of negative sentiment exacerbated by the partial nationalisation of US, European and UK banks. Although Australian banks have much stronger balance sheets, ANZ is the only one of the big four that hasn’t undertaken a significant capital raising. Yet the risk of a possible capital raising, combined with a forecast cut in dividends, makes ANZ our least preferred bank.
Simon Bond, ABN AMRO Morgans
Mosaic Oil NL (MOS)
December half year revenue was up 40 per cent and net profit was up 35 per cent. The company offers upside from today’s levels if current exploration and stgelopment projects deliver results. The company is also well positioned to benefit from rationalisation of the junior oil sector.
This renewable energy company has significant cash reserves, certainly enough to fund stgelopment plans and pilot plant construction. Tests on its geothermal reserves are completed. If the results are successful, it will validate the planned project.
Lihir Gold (LGL)
The gold producer has raised US$325 million via an institutional placement. Proceeds will be used to pursue growth opportunities and expand financial options. The company is generating enough cash to continue its growth plans.
AP Eagers (APE)
A listed automotive retailer up against slowing new car sales. We don’t expect a recovery in the automotive market before 2010. While acknowledging the group’s substantial, well-located property portfolio, we believe the value of these properties is unlikely to be realised in the current market. But hold this stock for the longer term.
The recent reduction in dividends dampens future expectations. We’re downgrading our forecasts as funds under management decline. Net outflows show no signs of abating in the short term and weaker equity markets will only exacerbate problems.
Aristocrat Leisure (ALL)
The 2009 outlook for this gaming machine maker appears uncertain and we believe the stock is too expensive in this market amid short-term earnings risk. Aristocrat faces challenges on too many fronts and we expect deteriorating earnings.
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