Cleo Nanni, Novus Capital
Challenger Energy (CEL)
Challenger Energy is an oil and gas explorer with a portfolio in the US and South Africa. The company recently announced an excellent result for its Triple Crown Prospect in Texas. This prospect continues to exceed the board’s expectations. The Original Gas in Place assessment is 9 trillion cubic feet across existing land holdings of 45,000 acres. A speculative buy.
Woodside Petroleum (WPL)
Woodside is Australia’s largest listed oil and gas producer. Its portfolio includes liquefied natural gas, domestic gas, condensate, crude oil and liquefied petroleum gas. The share price action has been disappointing, and the company is due to rally based on good recent results. Woodside is a strong buy and my target this year is $48. On March 10, 2011, the share price was trading at $42.30.
Rio Tinto (RIO)
The share price of this global resources leader has been softening due to international uncertainty and falling commodity prices. If the share price falls to $80 or below, then consider accumulating as a return to retest $90 won’t be that far off in my view. The company’s price was trading at $80.58 on March 10, 2011.
BHP Billiton (BHP)
The assets of the world’s largest diversified resources company are well located to service ever- increasing demand from Asia. The company’s significant advantages are its low cost operations and strong balance sheet. The recent share price action indicates range-bound trading between $43 and $47. Accumulate at the bottom end of the range. On March 10, 2011, the stock was trading at $45.14.
Macmahon Holdings (MAH)
Macmahon is an Australian construction and contract mining firm. Total company revenue was down 8 per cent in this year’s first half. There was no interim dividend. NPAT (net profit after tax) is forecast at $15 million for the second half. Wait and see if the company can meet this NPAT forecast before considering to buy. In the meantime, investors should consider selling.
Aristocrat Leisure (ALL)
Competition in the global poker machine market is fierce. This puts pressure on company revenue. In my view, the stock appears to be trading at a significant premium. The shares were trading at $3.44 on March 10, 2011. I expect the share price to retreat in coming months.
John Rawicki, State One Stockbroking
Energia Minerals (EMX)
Energia Minerals, a promising small uranium explorer, recently upgraded its Carnarvon Basin project in Western Australia. It now has a respectable 9.2 million pounds of uranium. Considering it only drilled along three kilometres of a total strike extending more than 60 kilometres, potential exploration upside is big. Further drilling is scheduled for mid April, and, if successful, may double or triple its resource. I am initially targeting 44 cents for a highly speculative buy. The company was priced at 26.5 cents on March 10, 2011.
Signature Metals (SBL)
We like SBL as it provides the speculative investor with good exposure to an unhedged near-term gold producer. With its Ghana project expected to start production soon, the company is well positioned to take advantage of record high gold prices. Its project is situated in the highly- prospective Ashanti Gold Belt, a well-known producing region. Ghana offers a stable government and an established mining environment.
Fleetwood Corporation (FWD)
Fleetwood is one of the largest manufacturers of mobile accommodation, such as caravans. Management is experienced and conservative, which is reflected by FWD’s strong free cash flows. The company’s contract with Woodside Petroleum to expand its accommodation village at Karratha will bring additional revenues.
Panoramic Resources (PAN)
The company mines about 20,000 tonnes of nickel a year. The stock appears oversold after posting a weaker than expected first half 2011 profit result. The shares appear to offer value considering near term earnings. A strong nickel price is supported by an outlook of solid global demand. The company has about $150 million cash in the bank.
PanAust Limited (PNA)
Company profits were up substantially in full-year 2010 on the back of stronger copper prices and increasing production at its mine. But the share price appears overbought at current levels. Investor expectations are high given the company’s successful track record of bringing projects into production. Any decline in copper prices, or project delays will pressure the share price. The share price was trading at 72.5 cents on March 10, 2011.
Macmahon Holdings (MAH)
First half 2011 revenue for this mining and civil engineering contractor fell 8 per cent. Operating cash flow was down 39 per cent. The outlook seems a bit dim. Any decrease in mining activity could put more pressure on revenue. Macmahon’s profit margins are thin and it faces the challenge of managing a large equipment fleet during a notoriously cyclical period. Suitable only for risk-tolerant investors.
Richard Batt, Shadforth Financial Group
Origin Energy (ORG)
Origin and ConocoPhillips are joint owners of Australia Pacific LNG Pty Ltd (APLNG). APLNG recently signed a heads of agreement with Chinese company Sinopec to supply up to 4.3 million tonnes of LNG a year for 20 years. Sinopec will take a 15 per cent stake in APLNG. This is a significant development for Origin, as the benefits will go a long way to underpinning future growth.
Independence Group (IGO)
A high grade nickel producer, the company has a strong balance sheet with $300 million in cash and no debt. It recently announced a 78.5 per cent increase in net profit to $22.6 million – a result of higher nickel prices and increasing production. It’s also launched a takeover bid for zinc and copper miner Jabiru Metals. A successful takeover should increase the group’s low-cost production base and raise the exploration effort.
Ramsay Health Care (RHC)
This private hospital operator recently announced a half-year net profit of about $103 million, up 31 per cent. The earnings increase is a result of strong organic growth and a higher contribution from expansion projects, which are now completed. The stock suits long-term portfolios wanting exposure to an industry that provides services to an ageing population.
The company’s first half underlying net profit increased 5 per cent to $125 million on the back of strong iron ore earnings. Weak steel volumes and margins were disappointing because of the higher Aussie dollar. In the short term, there’s positive signs iron ore earnings will continue to grow, which should offset any further weakness in other operations.
Operating profit for this CHEP Pallet and Recall company was up more than 8 per cent to US$225.4 million for the half-year ending December 31, 2010. The result was broadly in line with expectations. Increasing revenues in emerging markets is encouraging, but weakness in established markets is a concern. For BXB to post better future returns, it needs a recovery in the bigger, more established markets and this appears unlikely in the short term.
Reece Australia (REH)
Supplies bathroom and plumbing products to more than 400 trading outlets across Australia and New Zealand. The company recently booked a 3.9 per cent rise in net profit to $59.8 million. But the prospect of higher interest rates amid cost of living increases may provide a challenging operating environment. Better value exists elsewhere.
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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