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PREVIOUS ARTICLE 18 Share Tips - 10 May 2010 NEXT ARTICLE Broker Buys and Downgrades to Commodity Stocks - Post RSPT

Shawn Uldridge, William Shaw Securities

BUY RECOMMENDATIONS

BHP Billiton (BHP)

The world’s biggest miner has underperformed the market in the past month. It’s been hurt by marginally falling commodity prices, but the major hit in confidence is due to the Federal Government’s proposed super tax. We don’t expect the tax to get up, so BHP should return to market favour. Our price target is $42. In early morning trade on May14, BHP was priced at $38.28.  

Woodside Petroleum (WPL)

The price of this oil and gas giant had fallen back to levels that placement shares were sold to the market in February 2010. Our view is oil can only go up. Oil and Woodside Petroleum have been hit in the past two weeks on news of the Greek debt crisis. But this appears to be waning. We see WPL going back to highs around $47.50. On the morning of May 14, WPL was trading at $44.57.

HOLD RECOMMENDATIONS

AMP (AMP)

The share price of this insurance and wealth management giant has been recently trading below $6 due to a combination of market weakness and its drawn-out takeover discussions with AXA. However, AMP is fundamentally cheap and we expect it to be trading vastly higher within 12 months. It’s also possible that a takeover offer will emerge from one of many different market players. Our long-term price objective is $7.50. AMP was priced at  $5.95 in early morning trade on May 14.

Lend Lease (LLC)

Lend Lease recently completed a capital raising of $900 million to fund domestic property stgelopment opportunities. As we all know, property is hot right now, driven in large part by a massive shortfall in supply. Mid-size stgelopers are still not able to source adequate funding, and LLC can now assist to fill that gap through internal funding. Price weakness should not be viewed as fundamental weakness. Hold for the long term of $10 plus a share. It was priced at $7.95 in early morning trade on May 14.

SELL RECOMMENDATIONS

Harvey Norman (HVN)

This retail giant just can’t turn a trick. Great sales results reported in September last year drove the share price above $4 on the expectation of a strong return to growth. Unfortunately, sales growth has stagnated on the back of rising interest rates and softening consumer demand, and the share price has followed. There may be a little further downside in Harvey Norman shares.

Fortescue Metals Group (FMG)

This iron ore producer has been in the news lately because of the potential impact of the super profits tax. But China is putting the brakes on its own over-heating economy, and this could translate into flat iron ore prices for a few years at least. This over-riding negative sentiment, and already fully priced shares, will stop any rally in its tracks.

Michael Heffernan, Austock

BUY RECOMMENDATIONS

CSL (CSL)

The share price of this world class blood plasma business has been treading water in recent times, but this situation only tends to belie its favourable profit outlook. The likelihood of a stronger US dollar later this year enhances CSL’s profit prospects, notwithstanding US litigation issues.

BHP Billiton (BHP)

While suffering a sharp knee jerk share price fall following the Government’s response to the Henry Tax Review, continuing economic improvements across the world should enhance BHP’s sales and profits in the medium term.

HOLD RECOMMENDATIONS

Woolworths (WOW)

The supermarket giant has been a reliable profit and dividend performer over many years. It recently produced a workman-like quarterly sales report, and retains its profit guidance of between 8-to-11 per cent growth for the current financial year.

Commonwealth Bank (CBA)

Expect it to be a key beneficiary, should the Henry Tax Review be implemented at some stage in the future. The increasing momentum of domestic economic activity should continue to benefit its bottom line.

SELL RECOMMENDATIONS

Centro Properties Group (CNP)

A glimmer of improvement in the listed property market has seen Centro recover strongly from a near death experience two years ago. Accordingly, investors who bought this stock in the past 12 months should consider taking profits, as sustained improvement still seems a little way off.

Coffey International (COF)

This global professional services consultancy firm recently posted a disappointing trading update.  Expect a further easing in revenue in the current half year. While its pipeline of major projects provides good prospects in the more distant future, there’s no need to be here now as there’s better options available.

Andrew Inglis, Shadforth Financial Group

BUY RECOMMENDATIONS

Platinum Asset Management (PTM)

PTM is the best performing international share fund manager in Australia.  The continuing growth of Australian superannuation (and a possible increase in the superannuation guarantee levy) means that a higher proportion of Australian super will be invested overseas.  PTM is pursuing mandates in the wholesale super market, which is a significant new target market.  This positions PTM well for future growth.

QBE Insurance (QBE)

QBE has $25 billion invested in international money markets in the form of short dated securities.  As interest rates begin to rise, QBE will be a major beneficiary from higher interest income. QBE has plenty of fire power for acquisitions and has a good track record here.

HOLD RECOMMENDATIONS

Nufarm (NUF)

Nufarm’s performance has been disappointing in response to a price war in the important glyphosate market.  However, a strategic alliance with global peer Sumitomo, a stronger balance sheet and a share price at six-year lows means Nufarm is worth holding despite volatile profits.

Campbell Brothers (CPB)

CPB is now primarily an international laboratory testing company specialising in minerals, coal, tribology and food.  CPB has considerable scope for further growth, but after the recent strong share price rally, the price is likely to consolidate for a while.

SELL RECOMMENDATIONS

Charter Hall Group (CHC)

Charter Hall has recently taken over the management of several Macquarie Group property trusts.  This large integration project will extend management’s ability, as there’s not a lot of overlap with its existing operations.  In our view, accounting has been opaque and inconsistent.

BT Investment Management (BTT)

BTT has $35 billion in funds under management and is one of the larger fund managers.  But its Australian share funds are struggling to outperform due to their size and structure.  I recommend a switch into peer Platinum Asset Management, which has a better long-term outlook in this industry.

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.

 

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18 Share Tips – 17 May 2010

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