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Gary Glover, Novus Capital

BUY RECOMMENDATIONS

QBE Insurance (QBE)

QBE is a leading provider of general insurance and re-insurance services. Its half-year report missed market expectations and the share price fell 10 per cent. This presents a top opportunity to buy a blue chip stock at a reasonable price.

CSR Limited (CSR)

This company makes and supplies building products, mills raw sugar from sugarcane and produces ethanol and refined sugar products. China’s Bright Food Group has sweetened its conditional takeover offer for Sucrogen – CSR’s sugar and renewables businesses – to $1.75 billion. A good risk/reward play at current levels.

HOLD RECOMMENDATIONS

Caltex Australia (CTX)

Since recommending Caltex as a buy in thebull.com.au, the stock has risen from the $9.50 level to above $11. If you bought this stock, my recommendation is to hold, as we are still a long way off its historical highs. Any share price retreat can be seen as a buying opportunity.

BlueScope Steel (BSL)

The recent half-year report was below market expectations, but good news seems to be emerging out of China again in relation to construction and building numbers. As a result, BlueScope should be a beneficiary.

SELL RECOMMENDATIONS

JB Hi-Fi (JBH)

Richard Uechtritz has announced his intention to retire as chief executive later this year.  We believe most of the good news is priced into this stock, and an end to government stimulus adds up to downside risk.

ANZ Bank (ANZ)

The ANZ share price has rallied strongly, particularly in the past six weeks. The banking sector looks fully priced here and we think it’s time to take some money off the table. Opportunities may arise to re-enter at a lower price.

Ben Potter, RBS Morgans

BUY RECOMMENDATIONS

Eastern Star Gas (ESG)

We anticipate a continual stream of good news during the next 12 months, including further reserves upgrades. The shares may also receive a boost if Santos, its largest shareholder, makes a full takeover bid.

QBE Insurance (QBE)

Rising global interest rates will favour QBE, which is now trading below its historical price-to-earnings average. A strong balance sheet and good management have always been unquestionable with this insurer.

HOLD RECOMMENDATIONS

Tatts Group (TTS)

This gaming company has acquired the 40-year NSW Lotteries licence for a reported $850 million, which we believe provides a good strategic fit. A solid fully franked dividend yield supports the current share price.

Woolworths (WOW)

The recent strong profit result demonstrated the resilient nature of its earnings through the economic downturn. A share buyback announcement also shows prudent capital management.

SELL RECOMMENDATIONS

BT Investment Management (BTT)

This Australian based funds management business has benefited from a recovery in global sharemarkets throughout 2009, but, in our view, it’s now trading on an expensive price multiple.

Tap Oil (TAP)

TAP’s cash flow is in decline and the company is planning an extensive exploration program during the next 15 months. We believe positive news flow in the short term will be limited.

Andrew Doherty, Morningstar

BUY RECOMMENDATIONS

JB Hi-Fi (JBH)

Operates more than 100 branded electrical stores across Australia and New Zealand and is rapidly growing via an aggressive store roll-out program. Consumer appetite for technology upgrades, electronics and home theatres is proving robust despite tight discretionary spending patterns elsewhere. An opportunity is provided by recent price weakness on a slightly disappointing half-year profit release and the retirement of CEO Richard Uechtritz.

Transfield Services (TSE)

This provider of engineering and maintenance services has an impressive record of contract renewal and extension. More than 90 per cent of contracts were successfully renewed. Australian earnings will be supported by ongoing infrastructure work in power, road, rail, water, the telecom sectors and an uplift in oil, gas and mining activity. The modest share price understates its prospects.

HOLD RECOMMENDATIONS

GUD Holdings (GUD)

GUD designs and sources a wide range of household appliances, including the Sunbeam brand and Davey water pumps. Earnings have been boosted by low-cost offshore product sourcing amid enhancing and leveraging brand strength. Organic growth is now marginal. The healthy 7 per cent fully franked dividend yield provides support.

Amcor (AMC)

In Australia, AMC provides a full range of packaging products. The key revenue driver is still consumer spending on food, beverages and healthcare. The recent Alcan acquisition was well timed and strategically sound. Ongoing global restructuring will ease raw material cost pressures. AMC offers reasonable upside on solid cash flows, but dividends aren’t usually franked.

SELL RECOMMENDATIONS

Cabcharge Australia (CAB)

It’s had a quasi-monopoly position in the taxi fare processing industry for some time. The bus operations and UK business present longer term upside. CAB faces problems ahead with heightened competition, ACCC (Australian Competition & Consumer Commission) proceedings and potential technological redundancy. We believe CAB is only suitable for risk-tolerant investors due to adverse structural change in the fare processing industry.

News Corporation (NWS)

News is a globally integrated and diversified media company. Creation of in-depth regional and national content is distributed through different media channels. Revenue growth from Pay TV assets offsets declines from traditional newspaper and broadcast television sales. We believe the share price is excessive at current levels.

Please note that TheBull.com.au simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of TheBull.com.au. You should seek professional advice before making any investment decisions.

Other articles in this week’s newsletter

Who Picked the Top Stocks? Stock Pickers’ Showdown

18 Share Tips – 6 April 2010

How to make extra income on your shares

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How Return On Equity Can Help You Find Profitable Stocks

The ABC of options trading

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