Gavin Wendt, MineLife
BUY RECOMMENDATIONS
Minotaur Exploration (MEP)
Chart: Share price over the year
One of our favourite exploration plays, maintaining a diverse portfolio of projects. It offers a well-credentialed management team, and solid cash reserves ensure aggressive exploration activity. In the past month, Minotaur has announced three new major exploration initiatives in South Australia and Queensland. It’s also just welcomed the highly regarded Sprott Group onto its share register with a 12.23 per cent stake.
Transerv Energy (TSV)
Chart: Share price over the year
TSV is generating strong interest in response to drilling two appraisal wells on its undeveloped Warro gas field within the Perth Basin. The company has a heavy hitting joint venture and off take partner in Alcoa, which is earning a 65 per cent stake through $100 million expenditure. Transerv has just announced a more than doubling of its Warro Contingent gas resource.
HOLD RECOMMENDATIONS
West African Resources (WAF)
Chart: Share price over the year
Continues strong momentum towards production status after completing the takeover of Canadian listed Channel Resources during 2014. It completed the procurement of a second hand heap leach ore treatment plant. Pre feasibility study results were encouraging and a definitive feasibility study should soon be completed. The company remains strongly placed to achieve first commercial gold production during 2016.
Metalicity (MCT)
Chart: Share price over the year
MCT has made a solid return to ASX trading after finalising the acquisition of the Admiral Bay project – one of the world’s largest undeveloped zinc projects. There’s significant scope for resource upgrade and expansion, given mineralisation has been intersected along an 18 kilometre strike length. The initial six month work program through to scoping study completion is fully funded by $6 million of cash reserves.
SELL RECOMMENDATIONS
Newcrest Mining (NCM)
Chart: Share price over the year
Increasingly relies on its Cadia operation in NSW, as it continues to be negatively impacted by what I consider underperforming operations, such as Lihir Island and other high cost, short duration assets. Newcrest is likely to fast track operations, such as the Wafi-Golpu project in Papua New Guinea, or sift out acquisitions in order to maintain its production profile. In my view, there are just too many question marks over this company.
BHP Billiton (BHP)
Chart: Share price over the year
Has added environmental catastrophe – in the form of the Samarco disaster in Brazil – to an extensive list of management failures in recent years, which has only added to shareholder angst. Start with failed corporate deals encompassing Pilbara iron ore, Rio Tinto and Potash Corp of Canada. Then extend to expensive forays into US shale energy and excessive and ill-timed spending on iron ore expansions at a time of falling Chinese demand. In my view, the company has a poor decision making track record.
Jeremy Hook, TMS Capital
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BUY RECOMMENDATIONS
REA Group (REA)
Chart: Share price over the year
Operates residential and commercial property websites in Australia, Europe and China. REA Group also has a shareholding in US online real estate player Move Inc. REA is also bidding for ASX listed iProperty Group. We see a strong balance sheet and continuing earnings growth as the key drivers for the stock.
Lend Lease Corporation (LLC)
Chart: Share price over the year
An international property and infrastructure group, with operations in Australia, Asia, Europe and the Americas. Lend Lease generates 30 per cent of its earnings offshore and has a solid pipeline of projects, including the unique Barangaroo project in Sydney. LLC generates strong returns on capital and is attractively priced at current levels.
HOLD RECOMMENDATIONS
Ramsay Health Care (RHC)
Chart: Share price over the year
Operates 212 hospitals and day surgery facilities across Australia, the UK, France, Indonesia and Malaysia. Ramsay has been one of the standout growth stocks in the Australian market. It continues to drive growth via acquisitions and brownfield developments. It enjoys an enviable reputation.
Magellan Financial Group (MFG)
Chart: Share price over the year
MFG now manages more than $40 billion and is on track to exceed its stated target of $50 billion in the near future. However, the market is fully informed of its performance, as indicated by its share price. We have moved from a buy to a hold at these levels.
SELL RECOMMENDATIONS
Sydney Airport (SYD)
Chart: Share price over the year
We like its strong income streams -passenger charges, retail and parking. The company has very strong pricing power. Oddly, the asset is unregulated – it can increase charges as demand rises. Much of the gains have been made on the back of incredibly low global bond rates, which, in our view, won’t last. Carrying $7 billion in debt, we believe SYD is over priced.
iProperty Group (IPP)
Chart: Share price over the year
IPP has been a great story and a big win for investors. REA Group has launched a takeover bid for IPP. Because most investors won’t want to take scrip in an unlisted vehicle, the time is up for holding the stock. Sell and enjoy the profits, which can be reinvested in stablemate iCar Asia or big brother REA.
Michael Heffernan, PhillipCapital
BUY RECOMMENDATIONS
TPG Telecom (TPM)
Chart: Share price over the year
Provides a comprehensive range of internet and related multi media services. It’s been a strong sharemarket performer and offers an attractive growth profile. It’s been one of the best share price performers of the top 100 stocks in the past year, posting a stunning 35 per cent increase, with more gas in the tank.
SG Fleet Group (SGF)
Chart: Share price over the year
This salary packaging business has also been a strong sharemarket performer since listing in March 2014. It has attractive fundamentals, a reasonable dividend and solid growth prospects. The recent acquisition of novated lease business NLC is expected to be 25 per cent earnings accretive.
HOLD RECOMMENDATIONS
CSL (CSL)
Chart: Share price over the year
This world class blood plasma business has rivers of gold royalty streams, but it also benefits from a stronger US dollar as the American economy continues to improve. Its renewed share buyback only serves to enhance its appeal. It’s a stock that just keeps on going.
ASX Limited (ASX)
Chart: Share price over the year
Could be back in the winner’s circle with the rash of new floats and rights issues. The improving economy is a tailwind, and it also pays an attractive fully franked dividend.
SELL RECOMMENDATIONS
Orica (ORI)
Chart: Share price over the year
As the mining sector has been experiencing severe headwinds in recent years, Orica has been downgraded substantially. Unfortunately for Orica, it’s now predominantly an explosives manufacturer delivering its products to resources companies, which are severely cutting back on capital investments.
Crown Resorts (CWN)
Chart: Share price over the year
It looks to have overstretched itself with proposed casino expansions in Las Vegas, Sydney and a hotel development in Melbourne. Potential caps on tourist numbers from mainland China also suggest that future profit growth at the Melco Crown resort in Macau (in which Crown has an equity interest), may be less robust in the year ahead. Other gaming and gambling options appeal more.
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