10min read
PREVIOUS ARTICLE 18 Share Tips - 25 September 2... NEXT ARTICLE 18 Share Tips - 9 October 2011...

#FOTO:1308:200#

Mark Lennox, Think Technically.com

BUY RECOMMENDATIONS

Saracen Mineral Holdings (SAR)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

This mid-tier gold producer recently completed a $50 million placement. It produced an estimated 110,000 ounces last financial year, and expects a lift to 120,000 ounces in 2011/12 at a cash cost of less than $800 an ounce, including royalties.  Exploration permits at Red October, Whirling Dervish and Porphyry tenements have been upgraded. It’s targeting production of 250,000 ounces by 2015.

Kula Gold (KGD)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Woodlark Island, near Lihir Island in Papua New Guinea, is a well-known area for gold deposits. Kula’s Woodlark project has a potential 4 million ounce resource base. Expect a definitive feasibility study to be completed before the end of the year. The stock is tightly held, as directors own a sizeable stake. This shows confidence in the geology. Buy when you can and put the stock in the bottom draw.

HOLD RECOMMENDATIONS

Ramelius Resources (RMS)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

A 100,000-ounce a year gold producer with cash costs less than $350 an ounce. It has no debt and $99 million in cash. Its Wattle Dam mine life has been extended to December 2013. It’s unhedged to the gold price and offers upside in exploration permits.

CSL (CSL)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

The US dollar is likely to rise in response to Operation Twist – the US Federal Reserve’s plan to flatten the yield curve to drive down longer term interest rates. CSL should benefit as it generates a significant portion of earnings in US dollars. The chart also looks supportive and, given the market context, CSL could put on some weight as it’s viewed as a defensive stock.

SELL RECOMMENDATIONS

Newcrest Mining (NCM)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Australia’s biggest gold producer has relatively high cash costs. Accordingly, these costs will be viewed in a negative light with any sustained move to a lower gold price. Gold futures have been under attack and US Federal Reserve policy is moving to accommodate bond holders. We expect more selling from traders holding long-only positions in Newcrest.

Cochlear (COH)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Management not only has to contend with a global recall of the Nucleus 5 hearing implant, but with competitor Sonova re-entering the US market. The financial impact from the Cochlear recall is uncertain, as is the timing of a product re-launch back onto the market. Perceptions of stock upside will be limited at best.

#FOTO:1309:200# 

Peter Russell, Russell Research

BUY RECOMMENDATIONS

Campbell Brothers (CPB)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

A global leader in analytical services for the mining, environmental and industrial sectors. In the year to March, revenue rose 34 per cent to $1.1 billion, with earnings per share up 57 per cent. Debt is low and complementary acquisitions are contributing to its exemplary track record of growth, which in the past decade has been 32 per cent a year.

Ludowici (LDW)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

This long established international mining equipment and consumables supplier has been trimmed and invigorated. With several acquisitions integrated and adding scale to its consumable products output, it’s well placed and funded for further growth. We expect the price/earnings ratio of eight times to fall and the franked dividend yield to rise beyond six per cent.

HOLD RECOMMENDATIONS

Imdex (IMD)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

A global supplier of quality drilling fluids and down hole survey instrumentation to the resources sector. It benefits from exposure to increasing mining production and exploration. Debt is low and revenues and profits were a record last year. Revenue from continuing operations was up 53 per cent to $205.2 million and net profit after tax was up 196 per cent to $29 million. These numbers are set to grow with recent acquisitions and initiatives.

Mortgage Choice (MOC)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Australia’s largest independent mortgage broker continues to perform well in a tough market. Mortgage Choice built its book 6 per cent last year to $42.4 billion and franchise numbers rose 5.4 percent.  Net profit after tax on a cash basis rose 7.4 per cent to $15.9 million. New product initiatives helped drive the result. A dividend yield above 10 per cent is most attractive.

SELL RECOMMENDATIONS

Spotless Group (SPT)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

The company’s operating divisions include management, food, laundry, retail and cleaning. Spotless has expanded its facilities and event services for London’s Olympic Games and other overseas contracts. New management is focused, but this services group, with 33,000 employees, operates in a tough environment. We see better prospects elsewhere.

News Corporation (NWS)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

News has annual revenues of more than $US33 billion. Its diversified media activities cover cable and satellite broadcasting, films, TV and publishing. Its performance in new media has been modest. The latest full year dividend was less than US20 cents a share. Move on while a $US5 billion buy-back helps the share price.

#FOTO:1310:200# 

Warwick Grigor, BGF Equities

BUY RECOMMENDATIONS

Metminco (MNC)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Metminco has a world-class copper project in southern Peru. The Los Calatos resource could contain significantly more than the Joint Ore Reserves Committee compliant 926 million tonnes, made up of an indicated resource of 111 million tonnes and an inferred resource of 815 million tonnes. We believe resource estimates may now exceed 2.7 billion tonnes. MNC also has several other copper projects in Chile that offer much potential. A volatile market provides an opportunity to buy this company at what we consider bargain levels.

UraniumSA (USA)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Uranium is about the only commodity that hasn’t fallen off a cliff in recent weeks. The sector has been out of favour since February. UraniumSA recently released favourable economics for its in-situ leaching project in South Australia. Modelling shows cash costs of about A$24 a pound on production of 800 tonnes of uranium oxide a year with an internal rate of return of 52 per cent. The stock is due for a re-rating.

HOLD RECOMMENDATIONS

Perseus Mining (PRU)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Perseus is transitioning into a serious gold company with the successful commissioning of its first project in Ghana at a rate of 250,000 ounces a year. It’s rapidly moving to develop the Sissingue gold project in Cote d’Ivoire, which will take it to 400,000 ounces a year. We expect sustained buying now that the production mantle has been achieved, while merger and acquisition speculation will keep interest levels high.

Havilah Resources NL (HAV)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Havilah has a new shareholder in Minmetals and it recently agreed to take a $5 million placement at $1.25 a share – double the price the shares were trading at prior to the announcement. While Minmetals sees value in Havilah’s copper, gold and magnetite projects, the market doesn’t appear to at this point. This is a curious situation, so hang in there while directors seek to unlock value for shareholders.

SELL RECOMMENDATIONS

Alkane Resources (ALK)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Alkane enjoyed a good run on rare earths enthusiasm. Estimated returns from its Dubbo Zirconia Project are good, but market talk of a slowdown and possible delays aren’t doing the share price any favours. Combine this with risk aversion in a volatile market and, in our view, stocks like Alkane are likely to be on the outer for the foreseeable future. There will be time to get back in later.

Berkeley Resources (BKY)

 

Chart: Share price over the year to 10/03/2011 versus ASX200 (XJO) 

Berkeley was a favourite uranium stock last year. But a failed takeover bid for BKR followed by a dispute with the Spanish Government has sparked uncertainty. The share price has fallen as a result. In this market, funds could be working more effectively 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.