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Michael Heffernan, Austock

BUY RECOMMENDATIONS

BHP Billiton (BHP)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

The mining giant recently produced an impressive production report and is highly leveraged to improving global economic activity. While a softer iron ore spot price is a temporary set back, likely Chinese re-stocking in the months ahead should underpin future demand. Additionally, BHP’s diverse suite of minerals and geography paint a bright outlook.

Mineral Resources (MIN)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

A well credentialed crushing contractor, and iron ore and manganese producer. It looks good value at current prices. On November 3, it was trading at $10.79. The acquisition of additional access to the Kwinana Port in Western Australia boosts the company’s export capacity. 

HOLD RECOMMENDATIONS

Telstra (TLS)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

It’s proved very resilient in the past few months, as the European debt crisis has severely impacted many mainstream and blue chip ASX companies. The temporary easing in Telstra’s share price from time to time creates opportunities.

Commonwealth Bank (CBA)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

While the banking sector has been hit hard in recent times, a cut in interest rates leading to a lift in economic activity should be positive. The recent results from the other three major banks reinforced the strong result previously announced by the Commonwealth Bank.

SELL RECOMMENDATIONS

Westfield Retail Trust (WRT)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

Property, particularly retail, is still experiencing challenging times. As the listed property sector is a lagging indicator of economic activity, this sector won’t be the first to benefit once the economy improves. Other sectors look more attractive.

PMP Communications (PMP)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)The print media sector continues to face severe competition from new technology and internet-based media products. As with the property sector, media and advertising in the Australian economy aren’t in the front line to benefit from any improvement in domestic economic activity.

 

 

Nicholas Brooks, RBS Morgans

BUY RECOMMENDATIONS

Fortescue Metals Group (FMG)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

This iron ore producer remains one of our key growth stocks in the resources sector. Last month, the company announced that total resource inventory had increased to 11.42 billion tonnes. This doesn’t appear to be factored in by the market. We believe FMG is undervalued at these levels and offers good buying. On November 3, the shares were priced at $4.76.

Rex Minerals (RXM)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

The share price of this copper and gold explorer was savaged in September, as was the case with most mid cap resource stocks. Rex management has been holding roadshows and a number of institutions appear to like the story. In our view, there’s still plenty of growth upside and appeal at current prices. The shares were trading at $1.50 on November 3.

HOLD RECOMMENDATIONS

ANZ Bank (ANZ)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

Second half 2011 cash earnings of $2.768 billion missed our estimate by 0.6 per cent, while the dividend of 76 cents was in line with consensus. Costs came in better than expected. Bad debt charges were almost $100 million lower than anticipated. Asset quality has substantially improved and is a highlight of the latest full-year result. Its fully franked dividend yield of about 6.5 per cent certainly beats term ANZ deposits. It’s worth holding onto your ANZ shares.

Paladin Energy (PDN)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

The uranium sector has endured a torrid time since the Japanese Fukushima nuclear disaster in March. But Paladin appears to have potentially bottomed and is attracting the eyes of bigger players. Hold for now.

SELL RECOMMENDATIONS

Energy Resources of Australia (ERA)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

The company recently announced a $500 million capital raising for works at its Ranger uranium mine in the Northern Territory. But we see significant risks around the upcoming wet season, difficulties in gaining a mining lease extension and potential upwards revision to several costs. 

Goodman Fielder (GFF)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

This food maker is stuck between a rock and a hard place. High grain prices mean higher costs. Meanwhile, price wars between the supermarkets on bread and milk lead to very skinny profit margins. Better value can be found elsewhere.

 

Les Szancer, Alpha Broking

BUY RECOMMENDATIONS

Venturex Resources (VXR)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

This company is only interested in large finds. It has some massive copper and zinc deposits in the Pilbara region of Western Australia. As a bonus, it also has potential gold projects in central Brazil, which the company fully owns. Many small mining companies struggle to generate enough funds. This company has $10.6 million in the bank to take it aggressively forward.

Quintessential Resources (QRL)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

There’s so much too like about this company. The managing director is a big shareholder, so her money is on the line. The company is in Papua New Guinea and close to a very rich gold area. It owns drilling rigs, trucks, loaders and other equipment, so it can do the work for half the price of contractors. The company will start drilling shortly. In my view, this is a potential takeover target.

HOLD RECOMMENDATIONS

Newcrest Mining (NCM)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

Investors headed for the exit over of a bad production report and a volatile gold price. The world’s financial ills are far from over. If you own NCM, I believe you’re holding a great stock. Any price weakness provides a good opportunity to buy some more.

Woodside Petroleum (WPL)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

This oil and gas company is struggling to get back to a share price just below $48 in June. Oil and gas prices will go up at some stage and so will this company’s share price on the back of generating more revenue.

SELL RECOMMENDATIONS

AGL Energy (AGK)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

The share price hasn’t been a star performer in the past few years.  In June last year, the price was $13.68 before rallying to $16.80 over September and October 2010. It then fell back to $13.34. In September this year, it reached  $15.74 before retreating to $13.81. The second high is lower. From a technical perspective, a case could be made for a head and shoulders formation. On November 3, it was trading at $14.10.

Brambles (BXB)

 

Chart: Share price over the year to 4/11/2011 versus ASX200 (XJO)

I don’t see any growth in this stock. The stock, at one stage, has been as high as almost $15. But for the past few years, the stock has been trading between $6 to marginally above $7. It pays a dividend, but you could buy Telstra for half the price and twice the yield. On November 3, it was trading at $6.36.

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