John Rawicki, Ord Minnett


National Australia Bank (NAB)

With a forecast fully franked dividend yield of 7.3 per cent and trading on a low price/earnings ratio of 9.7 times, we expect NAB to satisfy both income-seeking and capital growth focused investors. The bank has managed to offset weak trading numbers by cutting staff costs. We expect 10 per cent earnings growth in 2012 and are forecasting a dividend of $1.88 a share next year.

Suncorp Group (SUN)

This Queensland-based financial services group delivered reassuring results for full year 2011. Suncorp is expected to implement price increases across its domestic insurance products, and should generate savings from claims initiatives in motor vehicle and home repairs. With surplus capital of $1.245 billion, Suncorp is nicely cashed up and could engage in debt repayments and capital returns in 2012.


Perpetual Limited (PPT)

Despite a decline in funds under management due to unfavourable market conditions, investors should hold this stock for its high dividend yield. We are forecasting a yield of 6.7 per cent in 2012. While our earnings forecasts have been downgraded, we believe Perpetual will retain an elevated dividend payout ratio in the near term.

Duet Group (DUE)

Duet holds interests in three gas and electricity utilities in Victoria and Western Australia. Following a recent capital raising, the company is well positioned to reap the rewards of a simplified and profitable asset base and a stronger balance sheet. Duet has indicated a dividend of 16 cents in 2012, representing a forecast yield (unfranked) of 9.6 per cent at current levels. 


Commonwealth Property Office Fund (CPA)

The company recently announced it was breaking $625 million of interest-rate swaps, reducing the chances of a special distribution. The stock trades on a distribution yield of 6.1 per cent and a price/earnings ratio of 12.9 times versus sector weighted averages of 6.6 per cent and 12 times respectively.

Austar United Communications (AUN)

Its third quarter result confirmed a difficult regional consumer discretionary environment. Suffering from a declining residential subscriber base, AUN will struggle to grow revenues. We don’t believe the Australian Competition & Consumer Commission will approve the proposed Foxtel bid. There’s no compelling reason to own it. We see better value in Seven West Media.


Peter Day, Wilson HTM


Pharmaxis (PXS) 

The Committee for Medicinal Products for Human Use (CHMP) has recommended the granting of a marketing authorisation for Bronchitol to treat cystic fibrosis. We expect an aggressive roll-out to begin in Europe in 2012. We expect the company to submit an application to the US Food and Drug Administration by the end of March 2012. Bronchitol could be available in the US by early in 2014.

Drillsearch Energy (DLS)

Explores, stgelops and produces oil and gas, with a primary focus on the Cooper Basin in central Australia. We have upgraded our price target to 98 cents a share. We expect future drilling to result in more oil production. Now, we also include upside for wet gas. The shares were trading at 66 cents on November 10.


QBE Insurance Group (QBE)  

We have further analysed QBE’s weather allowance for claims. It’s our view that the aggregation of smaller claims is the typical contributor. This has been highlighted by weak third-quarter results from US peers due to higher weather claims. Hold QBE for the longer term.

Woolworths (WOW)

Its supermarket business has been showing signs of fatigue. But a new managing director will bring organisational change. In the meantime, patience is required. The company should benefit from its home improvement investment. 


OneSteel (OST) 

This steel maker and iron ore exporter recently announced a first half profit downgrade after the recent slump in iron ore prices. Revised net profit expectations of between $55 million and $75 million were less than half of what some analysts had forecast. Iron ore spot prices have fallen by about 30 per cent in the past month.


This building products firm recently reported 13 per cent profit growth for the first half. But, as expected, company commentary and statistics increasingly point towards a softer residential outlook, particularly in Victoria. Accordingly, we have downgraded second half expectations.


Hamza Habib, Patersons Securities


Talisman Mining (TLM)

A well-funded gold and copper exploration company in Western Australia. The company has highly prospective tenements and has undertaken an extensive drilling program. The board is highly experienced. With drilling results due in the next few weeks, TLM offers strong potential upside.

Alligator Energy (AGE)

A uranium explorer with highly prospective tenements in the Northern Territory. It has exposure to one of the world’s premier uranium provinces for large, high-grade resources. The company has $10.5 million in the bank and a market capitalisation of $12.5 million, which are appealing. There’s substantial upside potential given it’s currently undertaking an aggressive drilling campaign.


Hastie Group (HST)

Although an earnings downgrade is a negative, new management is undertaking a progressive recovery plan, which should increase cash flows and reduce overheads. We expect this to reflect positively on HST’s share price in the medium to long term.

Woolworths (WOW)

Woolworths is planning to open 39 new supermarkets in 2012. Company guidance suggests growth to 2016. Woolworths is implementing new strategies to reduce costs. Its growth profile should increase earnings, but it may take time to be reflected in its share price.


GPT Group (GPT)

GPT recently provided a solid result in its quarterly market update. With high occupancy levels and rental increases, the group’s property portfolio is performing well. But the company’s share price has risen substantially and currently looks expensive on a relative basis.

OneSteel (OST)

Recently issued a profit downgrade. Given the substantial change in earnings, current market conditions may not be favourable for the company to recover in the short term. The company’s iron ore business, representing more than 80 per cent of full-year 2012 EBIT (earnings before interest and tax), is currently under pressure.

Please note that simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of You should seek professional advice before making any investment decisions.

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