Peter Russell, Russell Research
BUY RECOMMENDATIONS
Seek (SEK)
Chart: Share price over the year versus ASX200 (XJO)
A leader in online job ads in Australia and New Zealand, with a market share of about 70 per cent. It also offers dynamic growth. Contributions from online education may surprise in 2012, while there’s major potential in its overseas online employment investments. It’s a major player across China, Mexico, Brazil and Asia.
Tox Free Solutions (TOX)
Chart: Share price over the year versus ASX200 (XJO)
This waste management services group continues to grow, with an acquisition extending its Bowen Basin and Queensland operations. It has an agreement to buy the hazardous waste businesses of DoloMatrix for $58 million – already funded with a $27 million placement. Tox offers experienced management, high margins and barriers to entry.
HOLD RECOMMENDATIONS
McMillan Shakespeare (MMS)
Chart: Share price over the year versus ASX200 (XJO)
A leader in Australian salary packaging services and administration, including vehicle leasing. Credit and treasury operations are sound and provide flexibility. Growth prospects are well into double digits. We see a franked dividend yield above 5 per cent.
Forge Group (FGE)
Chart: Share price over the year versus ASX200 (XJO)
Forge has a strong and experienced team. It has a solid track record in engineering, procurement, construction management and maintenance in Western Australia and West Africa. It has low debt, and a partnership with shareholder Clough provides flexibility to undertake larger contracts.
SELL RECOMMENDATIONS
Treasury Wine Estates (TWE)
Chart: Share price over the year versus ASX200 (XJO)
Demerged from Foster’s in 2011, this global wine business faces considerable headwinds and competition in the UK and US markets. A strong Australian dollar is another challenge. Its partially franked dividend was below 4 per cent in December 2011. We expect it to underperform while restructuring its business. Returns are thin.
Perpetual (PPT)
Chart: Share price over the year versus ASX200 (XJO)
This substantial wealth manager and services business faces a challenging investment environment. It’s too dependent on volatile institutional funds and markets. In our view, diversification didn’t work and costs are high. Despite a franked yield of more than 7 per cent, others are preferred.
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Darren Jackson, Calibre Investments
BUY RECOMMENDATIONS
Newcrest Mining (NCM)
Chart: Share price over the year versus ASX200 (XJO)
The share price of this gold producing giant has recently retreated in response to a weaker gold price and an earthquake in Papua New Guinea. A landslide in New South Wales had a temporary impact on operations. But longer term, these events are negligible. Buy the dips.
Manas Resources (MSR)
Chart: Share price over the year versus ASX200 (XJO)
A gold explorer and developer in the Kyrgyz Republic in eastern central Asia. A feasibility study from its Shambesai project revealed compelling fundamentals – low cash costs and capital expenditure. MSR should be granted a mining licence soon. We expect the market to revalue the stock.
HOLD RECOMMENDATIONS
Viterra (VTA)
Chart: Share price over the year versus ASX200 (XJO)
A global agribusiness listed in Canada and Australia. As one of the world biggest grain handlers, Viterra should benefit from expected higher grain prices and quantities produced.
Tawana Resources NL (TAW)
Chart: Share price over the year versus ASX200 (XJO)
This West African gold junior recently completed a maiden geological study on two of its Liberian tenements. The country has been underexplored on a regional basis in favour of the more proven Ghana and Burkina Faso. Results of the study look promising and this is one to watch once drilling commences in 2012.
SELL RECOMMENDATIONS
Paladin Energy (PDN)
Chart: Share price over the year versus ASX200 (XJO)
This major uranium producer had been touted as a takeover target post the Fukushima nuclear meltdown. But no offer has emerged in contrast to broader merger and acquisition activity within the global sector. If you’re looking for value, or to play the impending uranium rebound, we suggest you look elsewhere.
Zimplats Holdings (ZIM)
Chart: Share price over the year versus ASX200 (XJO)
A platinum producer in Zimbabwe, it has single commodity risk. Sell to avoid further sovereign risk and possible dilution under the Mugabe Government’s Indigenisation and Economic Empowerment Act.
Mark Lennox, Think Technically
BUY RECOMMENDATIONS
Woodside Petroleum (WPL)
Chart: Share price over the year versus ASX200 (XJO)
The energy giant continues to underperform the oil price, with brokers recently lowering price targets. This was due to unexpected lower production guidance and indications of higher capital expenditure, according to a recent annual investor update. The stock is now attractively priced given potentially higher oil prices in the near term as the US begins to recover.
Macmahon Holdings (MAH)
Chart: Share price over the year versus ASX200 (XJO)
This construction and contract mining firm upgraded full year 2012 earnings guidance by 20 per cent to $55 million. The upgrade was driven by additional new work and fantastic progress on existing contracts. We believe a strong interim result could be achieved.
HOLD RECOMMENDATIONS
Macquarie Group (MQG)
Chart: Share price over the year versus ASX200 (XJO)
The investment bank announced a 24 per cent fall in net profit after tax to $305 million in the 2012 first half. Market conditions battered revenue. A potential share buyback set against a macro recovery in the US could see the stock fairly priced.
Newcrest Mining (NCM)
Chart: Share price over the year versus ASX200 (XJO)
In October 2011, we suggested this gold producer was a sell at $35.06 price. It was trading at $31 on December 22, 2011. Given the volatility in the US dollar (and hence gold), NCM may be a little overdone on the downside and we are moving to a neutral stance on the stock.
SELL RECOMMENDATIONS
Billabong International (BBG)
Chart: Share price over the year versus ASX200 (XJO)
The share price of this surf wear and sports apparel company dived after announcing an earnings downgrade in December 2011. Given the challenging retail environment, we see little chance of recovery in the immediate term.
Mayne Pharma Group (MYX)
Chart: Share price over the year versus ASX200 (XJO)
Possible delays in drug approvals may hold back a potentially higher share price in the first half of 2012. I see ongoing uncertainty surrounding the antibiotic Doryx. At this point, potential stock upside looks limited.
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