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Steven Hing, Novus Capital

BUY RECOMMENDATIONS

Sundance Resources (SDL)

An exploration company, with mining interests in West Africa. Its promising Mbalam Iron Ore Project is in the Republic of Cameroon. The company recently appointed Giulio Casello as managing director, and the share price made new highs this week. The shares are doing good volumes, and it appears that higher levels are attainable. The stock now seems to have found its way after losing its board in a plane crash in June this year. The stock was trading at 47 cents on December 17, 2010.

Queensland Mining Corporation (QMN)

QMN has copper projects at Cloncurry in Queensland, and has recently announced significant drill results for this project. With drilling continuing and several other announcements in the pipeline, it appears the stock can push towards old highs around the 20 cent levels and beyond. The company has recently made a few capital raisings and looks cashed up. It was trading at 18.5 cents on December 17, 2010.

HOLD RECOMMENDATIONS

JB Hi-Fi (JBH)

The market’s concerned about the impact of higher interest rates on Christmas sales, with consumers less inclined to spend this year. However, it appears demand for consumer electronics is still high, and the strong Aussie dollar has brought down prices, which, in turn, should lift sales.

Origin Energy (ORG)

As utility companies are considered defensive stocks, they should be immune to market shocks if another sharp fall occurs. The stock has recovered from lows of around $14.40 and is testing breakout levels for a move to $18 a share. On December 17, it was trading at $16.95 a share.

SELL RECOMMENDATIONS

Sigma Pharmaceuticals (SIP)

News that Pfizer will enter the Australian market and distribute its own goods ends its agreement with Sigma. The impact of this decision is likely to see the Australian pharmaceutical network exposed to direct distribution from big multi-nationals. Possible sector deregulation means more competition. There’s better value elsewhere.

Super Retail Group (SUL)

This discount store chain store focuses on automotive products. It relies on high turnover, low margin products to remain profitable, but I wouldn’t be surprised if the company fails to meet profit targets, I also feel the company paid too much for the Ray’s Outdoors retail chain. The chart suggests the stock will move to lower levels having breached the $6 support level. On December 17, SUL was trading at $5.93 a share.

 

Richard Batt, Shadforth Financial Group

BUY RECOMMENDATIONS

ANZ Bank (ANZ)

One of our preferred stocks in the banking sector and we expect it to perform well despite the Federal Government’s plan to introduce more competition in Australia. The company’s long-term strategic expansion into Asia, via the acquisition of Asian assets from the Royal Bank of Scotland, makes it a growth stock. If it achieves its goal to become one of Australasia’s leading banks, long term investors will profit.

Sundance Resources (SDL)

An Australian exploration company focusing on mining interests in the Republic of Cameroon and The Congo. The company’s Mbalam Iron Ore Project is aiming to confirm sufficient hematite mineralisation to support production of 35 million tonnes a year for the first 10 years of operation. With first production scheduled for 2014, Sundance Resources is ideal for growth portfolios.

HOLD RECOMMENDATIONS

Origin Energy (ORG)

Origin is a big winner from the NSW power privatisation. It’s acquiring the NSW Government’s integral energy and country energy retail businesses and entering into a power purchasing arrangement with Eraring Energy. Origin expects the deal to be materially earnings accretive, which will complement expected benefits from stgeloping its coal seam gas interests. It offers ideal exposure to the energy sector for long-term portfolios.

Gindalbie Metals (GBG)

It’s stgeloping the Karara Iron Ore Project, a project that could potentially produce 30 million tonnes of iron ore a year for more than 35 years. With magnetite concentrate production starting by the middle of next year, GBG continues to be an ideal exposure to the iron ore sector for long-term portfolios.

SELL RECOMMENDATIONS

Australian Pharmaceutical Industries (API)

API is an integrated healthcare services company with three divisions – retail, pharmacy and consumer. API’s outlook is uncertain as Federal Government initiatives to reduce the cost of the Pharmaceutical Benefits Scheme (PBS) may potentially hurt earnings. News that Pfizer Australia will cease distributing its prescription medicines through wholesalers (including API) from February 1, 2011, will further pressure earnings. Until there’s some real certainty around API’s earnings, we prefer other investments.

Super Retail Group (SUL)

SUL comprises four businesses – Super Cheap Auto, BCF (Boating Camping and Fishing), Goldcross Cycles and Ray’s Outdoors. The company is positioned as a value retailer, with an offer to beat any competitor’s price. In a difficult industry with no real barriers to entry, the general outlook for retail trading is still uncertain. The recent interest rate rise doesn’t help as this could lead to a fall in discretionary spending.

 

Michael Heffernan, Austock

BUY RECOMMENDATIONS

Mineral Resources (MIN)

An emerging manganese and iron ore producer, with a crushing business at Christmas Creek in Western Australia.  It has a range of growth options that are close to moving into an earnings capacity. It’s in the right sector at the right time.

ARB Corporation (ARP)

This highly innovative 4-wheel drive component maker has recovered strongly from economic difficulties of the past few years. Despite the competitive automotive sector, its innovative management equips it to more than match other local and overseas product suppliers.

HOLD RECOMMENDATIONS

Wesfarmers (WES)

This industrial conglomerate is well positioned to weather apparent softness in the retail sector. This is due to diversity of operations, such as coal, insurance, chemicals and fertilisers. It stands to benefit from an improving economy and continuing strong demand for Australia’s resources.

Ramsay Health Care (RHC)  

A pre-eminent listed private hospital operator, with attractive sharemarket fundamentals. The pressure on public hospitals across Australia means private hospital operators are poised to benefit from increasing hospitalisation associated with an ageing population.

SELL RECOMMENDATIONS

Aristocrat Leisure (ALL)  

This gaming machine maker has had its fair share of difficulties since the onset of the global financial crisis. It also faces pressure from American entrants into the Australian gaming market, apart from its struggling US and Japanese operations. The company trades on a high price/earnings multiple, detracting from its sharemarket appeal.

Billabong International (BBG)

This surfwear and sports apparel company recently issued a profit downgrade. Expect 2011 profitability to struggle in response to a sluggish US economy, a cool start to summer in Australia and a high Aussie dollar. The stock should pick up when world economies join a sustainable uptrend. In the meantime, there are better options in other sectors.

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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