9min read
PREVIOUS ARTICLE 18 Share Tips - 12 April 2010 NEXT ARTICLE Stock of the Week

Les Szancer, Kinetic Securities

BUY RECOMMENDATIONS

Regis Resources (RRL)

This company is engaged in exploring, evaluating and stgeloping gold projects in Western Australia’s eastern goldfields. It offers good prospects as it’s also involved with copper, nickel and platinum – commodities that are travelling well at the moment. The stock was in a very strong primary uptrend before going sideways in the past month.

Discovery Metals (DML)

The Botswana Government approved the renewal of seven tenements in September 2008, and all prospective areas were retained by the company. With the copper price almost doubling in the past 12 months, DML has gone along for the ride, with the share price more than tripling in the same period. Good prospects could see this stock go above $1.50. Discovery Metals was 90 cents in early morning trade on April 16.

HOLD RECOMMENDATIONS

Lihir Gold (LGL)

A major global gold producer, with operations in Papua New Guinea, West Africa and Australia. Lihir’s three producing operations have a combined total of more than 30 million ounces in gold reserves. The reason I’m putting a hold on LGL is because all the upside may have been already priced in.

Telstra Corporation (TLS)

Australia’s leading telecommunications company provides more than 9 million fixed lines and 10.2 million mobile services. The rumour mill is humming, but uncertainty still surrounds Telstra’s role in the National Broadband Network. Hold until we see what’s going to happen to Telstra.

SELL RECOMMENDATIONS

AMP (AMP)

A big retail and corporate superannuation provider and a significant investment manager. AMP seems to hit the wall between $6.80 and $7, and appears to be heading towards that price range again. But then I expect it to retreat.

Lend Lease (LLC)

While most of the market is going up, the share price of this property group has been heading south and seems to be struggling to hold its current price. Since the “divorce” from GPT, I believe the company has never been the same.

Carey Smith, Alto Capital

BUY RECOMMENDATIONS

McMillan Shakespeare (MMS)

McMillan, Australia’s largest provider of independent salary packaging services, recently acquired Interleasing (Australia) in what we believe is a company transforming transaction.  The $208 million acquisition will significantly increase the group’s exposure to the corporate car leasing market. We expect the purchase to be about 45 per cent earnings per share accretive.

Atomic Resources (ATQ)

This small cap stgelopment company has reported a coal resource of 210 million tonnes in Tanzania. Management is confident of significantly increasing the resource and has started a bankable feasibility study on the project, with plans to start small scale mining before the end of 2010.  We believe this small over-looked company provides excellent exposure to the coal sector, which is currently considered the hottest sector on the ASX.  

HOLD RECOMMENDATIONS

Coca-Cola Amatil (CCL)

Reported a record 11 per cent increase in profits for the 12 months to December 2009, and flagged high single digit profit growth for 2010. The company benefited from lower interest rates, cheaper petrol prices and government handouts. CCL is considered a defensive company, as its products are stocked by most retail outlets, and sales aren’t as badly affected by changes in the overall economy.

Ansell (ANN)

This healthcare protective products company is a defensive stock trading on a price/earnings ratio of around 13 times. The company is valued at a significant discount to other defensive stocks. Ansell is forecast to perform well during the next 12-months irrespective of whether the market moves up or down.

SELL RECOMMENDATIONS

Iluka Resources (ILU)

One of the world’s leading mineral sands companies, Iluka is very dependent on mineral sands demand and pricing. Last year, global demand for zircon fell 25 per cent due to a slowing housing/construction industry. Expect demand to remain soft for most of 2010.  The company’s share price has rallied more than 45 per cent in the past two months and is now trading significantly above our valuation. Having recommended the stock below $3 in June 2009, we suggest investors take profits. Iluka was priced at $4.81 in early morning trade on April 16.

Flight Centre (FLT)

Australia’s dominant travel agent, but an anticipated reduction in discretionary spending due to higher mortgage rates is likely to have a negative impact on earnings. A strong Aussie dollar also hurts earnings from the US and the UK.  Having recommended the company as a buy below $6 in February 2009, today’s share price above $20 is too rich for our appetite. Take profits.

Peter Russell, Intersuisse

BUY RECOMMENDATIONS

iiNet (IIN)

The third largest internet service provider in Australia, iiNet now supports about 900,000 broadband, telephony and dial-up services nationwide, with revenues of more than $520 million. It’s broadening retail appeal with the biggest VOIP (voice over internet protocol) network and is now moving to TV over broadband. iiNet is also bulking up its national coverage with acquisitions, while Telstra struggles with the National Broadband Network.

Downer EDI (DOW)

This major engineering group is exposed to substantial long-term growth in resource volumes, rail and infrastructure stgelopment and maintenance. The price declined recently on funding concerns over its 49 per cent owned joint venture Reliance Rail. We accept these will be solved, with little impact on Downer. A good opportunity to share the prospects in one of Australia’s key growth sectors.

HOLD RECOMMENDATIONS

Programmed Maintenance Services (PRG)

This major provider of maintenance, project and staffing services had a tough time in the global financial crisis-induced slowdown. But building maintenance work, including schools, new oil and gas project stgelopments in offshore Western Australia and staffing needs are increasing. With a full-year 2011 price/earnings ratio of around nine times and a 4.5 per cent franked yield, this proven performer is attractive.

QBE Insurance Group (QBE)

QBE’s outstanding growth record has been on hold pending a rise in global interest rates (a large slice of its investment income) and it making attractive acquisitions. On April 16, QBE announced it would buy the third largest US multi-peril crop insurance business, NAU Country Insurance Company, for US$565 million. The purchase enhances diversification and provides synergies for QBE. Enjoy the 6 per cent yield and the conservative management of risk.

SELL RECOMMENDATIONS

Centro Properties Group (CNP)

An example of several listed property trusts that have come back from the dead, but remain in intensive care. If you once invested for yield and security, recognise now that Centro and several others remain speculative and offer low and unfranked yield. We don’t expect any yield from Centro anytime soon. We see at least eight trusts as unattractive, and with low yield. Weigh up better opportunities.

Sigma Pharmaceuticals (SIP)

A success up to 2006, but the winds have changed. Earlier acquisitions built higher manufacturing volumes and margins, but more recently Sigma paid quite heavily to acquire Arrow and move into generics. The Pharmaceutical Benefits Scheme and competitive cost pressures have crunched its model of funding growth for its retail banner and wholesale market share. High debt will restrict flexibility and dividends.

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

Aussie Property – Safe as Houses, or a House of Cards?

18 Share Tips – 19 April 2010

Silver bull has further to run

ROA And ROE Give Clear Picture Of Corporate Health

What is the loan to value ratio of a share, and how does this change as the share price changes?

Stock of the Week

Is Your Investing Style Hot, Or Not?

The 5 Factors Of A “Good” Property Location

US Dollar Likely to Rally Further if S&P 500 Declines

Market data – NEW

More breaking news