Michael Heffernan, Austock


Kingsgate Consolidated (KCN)

A mid-tier gold miner with assets in Thailand. It offers low production costs, has little debt and is a major beneficiary of a stronger gold price. Also, the float of its Thai operating subsidiary is proceeding, and expansion of its processing plant is on budget.

Matrix Composites & Engineering (MCE)

Makes, supplies and exports specialised engineering products to the oil and gas industry. It has been a stellar sharemarket performer in response to record profits beating prospectus forecasts. It has a strong order book underpinning revenue in 2011. Its latest report was impressive and it’s in the right sector at the right time.


Coca-Cola Amatil (CCL)  

While Coke is an international icon, CCL is now a diversified Australian beverage maker, whose recent results were impressive. It has sound financials and it’s unlikely to be affected by any slowing in the economy.

Bradken (BKN)  

A mining services company which could be major beneficiary from Rio Tinto’s US$1.6 billion Hope Downs stgelopment in Western Australia. Growth prospects are attractive, although its debt is higher than others in the mining services sector.


Boral (BLD)  

A slowdown in house building leaves a strong turnaround in profitability some time off. Any near term lift in interest rates will compound difficulties facing the industry generally.

TPG Telecom (TPM)  

Following its lacklustre annual results recently, there’s increasing evidence that Telstra is becoming more competitive in the internet business, which will make life tougher for this company.

Shawn Uldridge, William Shaw Securities


BHP Billiton (BHP)

Widely covered by analysts and brokers across Australia, BHP has been recently sold off after announcing its bid for Potash Corp (which has since gone hostile and been extended). We’re backing the highly competent BHP Billiton management team and buying on weakness.

Quickstep Holdings (QHL)  

Quickstep makes patented carbon fibre parts for the aviation industry. It’s been contracted as part of a “joint strike fighter project” and is on track with its deliverables of test parts and processes. It expects to sign a formal contract, which would be a watershed, company- making event. Buy.


Woodside Petroleum (WPL)

This oil and gas giant offers a compelling investment case – both fundamentally and technically. It posted a strong interim result, has an expanding production profile and additional cash to flow from its Pluto-1 LNG project due to come on stream in March 2011.  

Westpac Bank (WBC)

Definitely our pick of the big four Aussie banks.  There’s fundamental reasons to own this stock. The loan-to-valuation ratio on its mortgage book is below 50 per cent. Since the GFC, the bank has only repossessed 294 homes across Australia, and 70 per cent of its borrowers are ahead on their mortgage payments.


Lend Lease (LLC)

Although this company has some compelling fundamentals, it seems unable to shake its powerful technical down trend. The stock is not overly liquid and is a favourite with shorters.  Although it seems to be flirting with breaking its current down trend, we believe any rallies should be considered as opportunities to exit any long positions in this stock. Your money is better served elsewhere.


This insurance and wealth management company is an uninspiring story. The stock suffered under heavy selling after releasing its results to the market and it now looks firmly in the grips of a down trend, which could see it fall to $4.50 before finding support.  Better value and more compelling investment cases exist elsewhere. Sell.

Peter Russell, Intersuisse


Bradken (BKN)            

A leading supplier of engineering consumables and rail wagons to the mining sector. Much of its revenue is recurring. Mining, power and rail activity offers strong growth. Bradken is well exposed to the drivers of China and India. It has modern plants in Australia, China, US and the UK. Earnings are linked to extraction tonnage. Offers a sound yield and there’s still a clear 10 per cent share price upside.

Industrea (IDL)            
Coal mining equipment sales to China and mining services activity are building scale, reach and profit momentum for financial years 2011 and 2012. Sales of its specialist mining vehicles and equipment grew soundly through 2010 as China focuses on safety and efficiency in its mines. A leader in a niche growth field, with prospects stgeloping in other countries. It’s still significantly underpriced.


GUD Holdings (GUD)        

Most households are aware of its portable appliances. GUD offers a focused, well-run and proven business model of design, testing and approvals in Australia and sourcing offshore, mostly in China. The acquisition of Dexion is the latest move in a well-managed portfolio. Offers attractive yield with growth, helped by a high Australian dollar.

IOOF Holdings (IFL)            

IOOF is the largest independent full service wealth manager after AMP. The Australian Competition & Consumer Commission’s decision to stop National Australia Bank from buying AXA and passing the North platform to IOOF doesn’t restrict IOOF’s growth as it trims its six platforms down to three and builds its existing $100 billion-plus funds. Regardless of deals, expect a strong 2011 and yields moving above 6 per cent.


GPT Group (GPT)            

One of Australia’s oldest real estate trusts, it suffered a catastrophic collapse amid massive capital raisings through the global financial crisis. Among others, GPT, in particular, still has legacy problems to tidy up despite a new board and strategy. We expect marginal earnings growth for some time and relatively low unfranked yields.

James Hardie Industries SE (JHX)
The bulls will jump at improving US housing starts for August. But US housing start figures are volatile and prone to adjustment. While new construction lags, empty houses abound. It will take time for a sound housing market to return and for employment to meaningfully grow. Better prospects exist elsewhere.

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