John Rawicki, State One Stockbroking
Mooter Media (MMZ)
Directly at the forefront of the social media revolution, Mooter’s stgeloping 30 photo-sharing games through a joint venture with Hot Shot Media. MMZ is sourcing talent from the Silicon Valley pool, and is set to earn sponsorship revenue from established global brands, such as Mercedes Benz. Expect a significant re-rating during 2010 as revenues start to build. A very speculative buy.
RTL Corporation (RTL)
RTL Corporation offers high-risk investors an exciting coal play opportunity. It’s an explorer with tenements close to Riversdale Mining’s well-known Benga coal deposit in Mozambique, Africa. In my view, RTL is comparable to an early-stage Riversdale, now a $1.8 billion mining giant. Another speculative buy.
Pan Asia Corporation (PZC)
Pan Asia is in the process of accumulating a portfolio of six Indonesian coal projects. Due diligence should be finished soon and we expect a favourable outcome. We suggest existing shareholders sit tight and consider accumulating the stock on weakness. Growth outlook appears bright if the company brings these projects on stream.
Astro Resources (ARO)
Trading has been in a holding pattern in the past few months, but this junior explorer has been showing signs of volume accumulation. The company announced it’s looking at further ventures and acquisitions. Expect to hear news from the company soon.
Exposure to the mining sector has delivered strong growth for this commercial explosives maker in recent years. Sustaining earnings growth will prove a challenge due to possibly weaker demand as mining houses cut production. With reduced production rates, chemical demand is expected to remain under pressure.
Expect Gunns to struggle in the export woodchip market as the outlook for paper and pulp demand remains soft. The outlook for its managed investment schemes division is forecast to stay flat. Expect Gunns to continue posting unimpressive earnings results until its pulp mill becomes operational. Doubts remain as to whether the mill will ever be constructed.
Sean Conlan, Macquarie Private Wealth
Computershare continues to be leveraged to a global recovery, particularly in the US and Europe. Added to this is upside from further capital raising activity in Asia. Consequently, we believe prospects for continuing top-line growth remain strong. We are upgrading our full-year 2011 numbers by 4 per cent to account for secondary raisings from major Chinese banks.
Qantas Airways (QAN)
A month combining increasing yields, capacity growth and improving load factors is ideal for Qantas. It should provide investors with increasing comfort relating to the outlook for demand during the final quarter. We remain optimistic about the likelihood of an upgrade to management’s existing underlying profit before tax forecasts of between $300 million and $400 million, even after taking into account the impact of volcanic ash disruptions.
Billabong International (BBG)
Short-term earnings compression appears to have reversed in the US. Billabong looks to have performed well relative to its peers in speciality apparel. A weaker Australian dollar against the US greenback is likely to generate investor interest in the stock. But a weaker Euro will possibly have a greater negative impact than a relatively stronger US dollar.
Platinum Asset Management (PTM)
We estimate PTM received $150 million of net inflows in April, although this was largely offset by a decline in international equity markets. PTM remains a strong franchise with attractive leverage to equity markets.
Atlas Iron (AGO)
We have made adjustments to reflect the uncertainty created by the proposed Resource Super Profits Tax. We also flag uncertainty about the iron ore producer’s expansion plan to export 12 million tonnes a year by 2012. We retain an underperform recommendation.
Cabcharge Australia (CAB)
On current multiples, a large proportion of the stock’s potential underperformance appears to be priced in. However, we expect the uncertainty surrounding the outcome of a pending ACCC (Australian Competition & Consumer Commission) court case and a decline in market share to continue weighing on the stock.
Ben Potter, RBS Morgans
Equinox Minerals (EQN)
Mining companies with overseas operations aren’t subject to the proposed Resource Super Profits Tax and, therefore, look set to outperform their Australian counterparts. Equinox has an open cut copper project in Zambia, which is long life and in production. It’s also a potential takeover target.
Super Cheap Auto Group (SUL)
The recent acquisition of Ray’s Outdoors provides the company with a strong three-year growth profile. We believe SUL is a standout mid-capitalisation company with a strong management team, and a track record of under-promising and over-delivering.
Sales in branded vitamin and herbal supplements have proven counter-cyclical in tough economic times. Company NPAT (net profit after tax) for the nine months to March 2010 was $19 million, a solid result that’s up 21.4 per cent on the previous corresponding period.
Centennial Coal (CEY)
A Thai coal miner recently bought a 14.9 per cent stake in Centennial, prompting rumours of another takeover in the coal sector. We’re positive on its export growth story as it continues to ramp up new mines and infrastructure projects.
Avexa has ceased further stgelopments of its lead HIV program, Apricitabine, after failing to secure a global licensing deal with a major pharmaceutical company. Our valuation was entirely based on this program. With uncertainty now surrounding its strategic direction, we believe the investment risks are too high.
Westpac Bank (WBC)
Although the recent profit result beat consensus estimates, WBC’s top line momentum looks much weaker than its peers. With easy gains on bad debts over and doubts about revenue growth, WBC’s premium is no longer warranted. ANZ is our preferred banking exposure.
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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