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Marcus Obermeder, Ord Minnett

BUY RECOMMENDATIONS

Carindale Property Trust (CDP)

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

CDP is currently trading at a discount to net tangible assets of $5.45. The discount doesn’t include the current expansion of Westfield Carindale, one of Brisbane’s biggest shopping centres. Stage 1 of a $300 million expansion was completed successfully. When the final stage opens at the end of this quarter, its 120 additional stores will make Carindale the fifth largest shopping centre in Australia.  New net tangible assets are between $6.45 and $6.90.

Lend Lease (LLC)

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

LLC’s integrated development model continues to offer good risk adjusted value and leverage into healthy medium term earnings. There are several catalysts, including LLC’s involvement in the Exemplar Health consortium, which won the $2 billion Sunshine Coast University Hospital project. LLC will design, construct and invest equity in the project.

HOLD RECOMMENDATIONS

Amcor (AMC)

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

Amcor is adding bolt-on acquisitions and it recently bought packaging distributor Wayne Richardson Sales. The stock is trading at a premium to its international peers and our $6.91 fundamental valuation. It’s a well-run company, but growth will become more challenging. On August 1, the stock was trading at $7.39.

Aristocrat Leisure (ALL)

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

This gaming company is forecasting an increase in net profit after tax to June 30, 2012. But aggressive discounting by retailers in the US may pressure margins. That said, I’m still looking for a share price recovery above $3, so hold. On August 1, the shares were trading at $2.31.

SELL RECOMMENDATIONS

Coca-Cola Amatil (CCL)

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

The soft drink bottler is trading well above our fundamental valuation, at a significant premium to its domestic defensive peers and well above its price/earnings five-year average. With potential downside risk to its longer-term returns in Indonesia, as a result of the Asahi/Indofood joint venture, I would be looking to take profits.

Platinum Asset Management (PTM)

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

PTM continues to experience net outflows due to poor investment performance. We don’t see the flow outlook improving in the near term as retail investors continue to opt for alternate asset classes (fixed interest) and international managers. We’re not expecting performance fee revenue to improve much in the 2012 second half.

 

Cleo Nanni, Alpha Broking

BUY RECOMMENDATIONS

Commonwealth Bank (CBA)

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

The Australian sharemarket’s biggest and best performing bank will be reporting its profit and dividend next week. The recent share price action indicates the market’s expecting a bumper result. Consider buying now for the opportunity to collect three solid, fully franked dividends during the next 13 months.

Wesfarmers (WES)

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

This company is a diversified conglomerate, well managed with exposure to the financial, retail and mining sectors. The recent price action has been positive. The outlook is bright, as Coles Supermarkets continues to improve and the Bunnings hardware chain remains a consistent performer. Like Commonwealth Bank, Wesfarmers is offering three solid, fully franked dividends in the next 13 months.

HOLD RECOMMENDATIONS

National Australia Bank (NAB)

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

The share price has put on solid gains from a low of $22 in June to $25 at the end of July. We expect a stronger share price if the company continues to reduce risk and complete the sale of its UK banks. Hold for dividend income, as it’s better than term deposits.

Westpac Bank (WBC)

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

The market is chasing dividend yield performers and the share prices are responding. This stock has rallied from a low of $20.43 in June to $23.39 in late July. It should retain positive momentum if margins continue to improve.

SELL RECOMMENDATIONS

CSL (CSL)

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

The share price action has been exceptional from a low of $26.39 in September last year to $43 in late July. Take profits in this blood products company, as we believe the price is likely to retreat on the back of a stronger Australian dollar. It’s well over-bought, in our view. We expect opportunities will arise to buy between $36 and $37.

Harvey Norman (HVN)

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

Not unlike most other bricks and mortar retailers, the share price has been adversely impacted by online competition. This issue will continue to affect all non-discretionary retailers. There are better companies and sectors to invest in.

 

Sean Conlan, Macquarie Private Wealth

BUY RECOMMENDATIONS

Miclyn Express Offshore (MIO)

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

We believe Miclyn is undervalued and remains on track to post strong earnings growth in the medium term. Key drivers of growth include strong earnings in the large vessel fleet, substantial improvement in tug and barge utilisation rates, high levels of third party repairs at the shipyard, revenue growth and acquiring the balance of Samson Maritime.

Goodman Group (GMG)

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

We expect news flow to remain positive in the near term as GMG achieves growth via US expansion and the launch of its Japanese fund. Additionally, the fundamentals of the industrial real estate sector remain resilient from a property sub-sector perspective.

HOLD RECOMMENDATIONS

CSR (CSR)

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

Although trading well below our target price, we believe further downside risks exist given uncertain aluminium prices, the uncertain timing of a recovery in residential activity and the impact of a high Australian dollar. However, CSR does retain significant leverage to any recovery in these key drivers.

Suncorp (SUN)

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

This company is trading near fair value. Risks around the non-core bank are offset by positive trading conditions within the insurance business. We believe a material capital return is unlikely at the August result.

SELL RECOMMENDATIONS

Energy Resources of Australia  (ERA)

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

While there’s been significant progress at the Ranger mine – in preparing for the operation’s transition post 2012 – we believe this uranium company remains a structural avoid. The shape of the future business remains opaque and, in our view, the risk-weighted value proposition continues to be challenging.

Specialty Fashion Group (SFH)

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

Our key focus centres on the ability to generate positive like-for-like sales growth, otherwise the sourcing and supply chain benefits will continue to erode. Sales won’t be helped in full year 2013 by the need to restrain refurbishment capital expenditure, either through landlord re-negotiations or financial constraints.

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