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Sean Conlan, Macquarie Private Wealth

BUY RECOMMENDATIONS

Computershare (CPU)

Chart: Share price over the year to versus ASX200 (XJO)

Computershare is a clear outperform, offering earnings certainty in the 2012 financial year. Expect 25 per cent earnings per share growth in 2013 and 2014, underpinned by synergies from the Shareowner Services acquisition, which, in our view, hasn’t been reflected in the share price.

Telstra (TLS)

Chart: Share price over the year to versus ASX200 (XJO)

The earnings outlook is stable, and recent presentations re-iterate strong free cash flow generation for several years. On our estimates, Telstra’s dividend yield for 2012/13 stands at 7.8 per cent. In 2013/14, the yield rises to 9.5 per cent. In 2014/15, we are expecting 10 per cent  – all cash backed and fully franked.  ?  ?

HOLD RECOMMENDATIONS

Brambles (BXB)

Chart: Share price over the year to versus ASX200 (XJO)

Brambles is starting to look attractive again from a valuation perspective, recently trading around 13.4 times 2013 earnings. But earnings momentum is subdued given the risk of further softening in CHEP’s major European markets.

Campbell Brothers (CPB)

Chart: Share price over the year to versus ASX200 (XJO)

This mining services company remains a quality business. But outperforming remains a challenge in this difficult macro-economic environment. Earnings upside isn’t as obvious.

SELL RECOMMENDATIONS

Cabcharge (CAB)

Chart: Share price over the year to versus ASX200 (XJO)

Negative news and uncertainty surrounds the future of Cabcharge’s business model. We believe the stock?will struggle to perform over the medium term in the absence of clarifying any?impact on earnings. 

Stockland (SGP)

Chart: Share price over the year to versus ASX200 (XJO)

This diversified property group is trading at our target price. We believe market earnings expectations are too high – we are 3 per cent below consensus for the 2013 financial year and 5 per cent below consensus in 2014.

 

James Cooper, Morningstar

BUY RECOMMENDATIONS

Woodside Petroleum (WPL)

Chart: Share price over the year to versus ASX200 (XJO)

This oil and gas giant is the only Australian listed company with major LNG interests in Western Australia’s Carnarvon Basin. It’s infrastructure-rich in LNG, making it a prime takeover target in an environment of high capital costs. Deciding some time ago to push ahead with infrastructure spending increasingly looks like paying off to the benefit of investors.

Incitec Pivot (IPL)

Chart: Share price over the year to versus ASX200 (XJO)

Expect strong growth in full year 2013 as production ramps up at the new Moranbah ammonium nitrate plant in Queensland. We also expect the company’s fertiliser business to benefit from improving margins in this year’s second half. The first half result was impacted by plant closures.

HOLD RECOMMENDATIONS

Ausdrill (ASL)

Chart: Share price over the year to versus ASX200 (XJO)

Events in Europe may trigger an economic global slowdown, impacting demand for gold, copper and iron ore. But the challenging outlook is factored in. The company remains a leading driller here and in West Africa.

Cabcharge (CAB)

Chart: Share price over the year to versus ASX200 (XJO)

A draft report into the Victorian taxi industry targets further deregulation to increase industry competition. But the company remains the dominant player and offers diverse services.

SELL RECOMMENDATIONS

Treasury Wine Estates (TWE)

Chart: Share price over the year to versus ASX200 (XJO)

Despite fierce competition in all markets, Treasury has an attractive portfolio of brands, a global distribution network and a balance sheet enabling it to ramp up exposure to faster growing regions, such as China. The company operates a good business, but, in our view, the stock is expensive. Reduce exposure. The shares were trading at $4.37 on June 28.

Fairfax Media (FXJ)

Chart: Share price over the year to versus ASX200 (XJO)

The media giant will be introducing a subscription model so readers will be paying for online content. As a result, major newspaper circulations may fall as more readers shift from print to digital platforms. Business risk remains high as its model enters unknown territory.

 

Hamza Habib, Patersons Securities

BUY RECOMMENDATIONS

Central Petroleum (CTP)

Chart: Share price over the year to versus ASX200 (XJO)

An emerging oil and gas company, with 68 million acres in four basins across central Australia. At a recent meeting, Richard Cottee was appointed chief executive. This is a positive step as Cottee is a prominent figure with a strong track record in this sector. CTP will now look to commercialise its vast acreage.

Wesfarmers – Partially Protected (WESN)

Chart: Share price over the year to versus ASX200 (XJO)

WESN is a partially protected ordinary share. In December 2015, these partially protected shares will covert to ordinary scrip, potentially providing investors with bonus Wesfarmers shares depending on the share price and other conditions. We view WESN as a solid long-term investment, with strong potential upside.   

HOLD RECOMMENDATIONS

Perpetual (PPT)

Chart: Share price over the year to versus ASX200 (XJO)

This investment group has forecast a full year profit fall of up to 65 per cent. It will cut staff and sell its underperforming mortgage services division. Although cutting costs cuts will be good for the company’s bottom line in the 2013 financial year, it may take time for it to be reflected in its share price.

Metcash (MTS)

Chart: Share price over the year to versus ASX200 (XJO)

The company expects single digit growth in underlying earnings per share in the 2012/13 financial year. It’s raising $325 million via an institutional placement to fund expansion in hardware and automotive parts. Investors should be rewarded in the longer term, but they need to be patient.

SELL RECOMMENDATIONS

Commonwealth Property Office Fund (CPA)

Chart: Share price over the year to versus ASX200 (XJO)

CPA has outperformed the S&P/ASX 200 in the past 12 months. An earnings upgrade has led to a higher share price. However, investors should consider taking profits at current levels, as the property market outlook appears subdued and this may impact dividend yields.

Iluka Resources (ILU)

Chart: Share price over the year to versus ASX200 (XJO)

The share price of this mineral sands producer has hit 52-week lows. More importantly, the share price has broken through the $12 support level. Further downside risks are anticipated from a technical perspective. The shares were trading at $11.17 on June 28.

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