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Peter Russell, Russell Research

BUY RECOMMENDATIONS

Campbell Brothers (CPB)

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

A recent annual general meeting approved a 5-for-1 share split and a name change to ALS Limited (ALQ), effective from August 21. This laboratory group is a major global player in minerals testing, but has branched out to food and other sectors, including environmental, industrial and energy. We expect first half 2013 net profit after tax of between $130 million and $140 million, which will be up on the same time last year. The wins continue.

SAI Global  (SAI)

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

A global compliance, assurance and information services group. The company has confirmed full year 2013 growth, but put no figure on it. We see the growth story intact and the shares offering good long-term value.

HOLD RECOMMENDATIONS

Domino’s Pizza Enterprises (DMP)

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

Full year 2012 saw 24 per cent earnings per share and dividend growth, a 31 per cent return on capital, same store sales up 6.5 per cent and an increasing cash surplus continuing an 11-year trend. Expect record store openings next year and online sales above 50 per cent.

IOOF Holdings (IFL)

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

This full service wealth manager has a strong track record of successful acquisitions and integration. We expect continuing efficiency gains through rationalising its platforms and processes. The friendly acquisition of Plan B Group Holdings is its latest move. Expect continuing growth and a strong franked yield.

SELL RECOMMENDATIONS

Transpacific Industries Group (TPI)

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

Recent guidance points to lower results from this recycling group, expected on August 23. It’s still restructuring, but carries high debt levels, which adds to risk. Shareholder value creation has been weak. Switch to the more nimble Tox Free Solutions (TOX), with a sound balance sheet and strong growth record.

Tatts Group (TTS)

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

Tatts shares have recovered strongly in the past year to regain early 2009 levels. Gaming, wagering and lottery industry changes in recent years aren’t complete. But a gaming licence expiring this month is likely to restrict high yield dividends. Take this price opportunity to move into better growth potential.

 

Richard Batt, Shadforth Financial Group

BUY RECOMMENDATIONS

BHP Billiton (BHP)

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

A well managed company offering top exposure to the resources sector for any portfolio. The share price has been under considerable pressure in recent times, with investors seeking income amid concerns about slowing demand for commodities. Long-term investors should ignore market commentary and take advantage of current price weakness and buy BHP. The shares were trading at $32.68 on August 16.

NRW Holdings (NWH)

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

Continuing speculation that major resource companies would reduce capital expenditure hurt the share prices of mining services companies. But this civil construction firm could actually benefit from the major miners spending more on existing projects. We see this as opportunity to buy or add to existing holdings in NWH.

HOLD RECOMMENDATIONS

ResMed (RMD)

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

This medical devices company recently reported its full year results for the year to June 30, 2012. Revenue was up 10 per cent to $US1.37 billion and net income rose 12 per cent to $US259.4 million. The company also declared a maiden dividend of A1.7 cents a share for the quarter. We consider RMD ideal for growth-oriented investors looking for exposure to the healthcare sector.

Ansell (ANN)

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

The rubber gloves maker recently reported a 6 per cent rise in net profit to $130 million for the 12 months to June 30, 2012. In a difficult trading environment, the company sees opportunities to grow by acquisition and organically, particularly in emerging markets, where it now generates about 25 per cent of its revenue. Long-term investors should retain exposure.

SELL RECOMMENDATIONS

Westfield Retail Trust (WRT)

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

The share price has rallied strongly as investors switched from cash and bonds into higher yielding listed investments. But the specialty retail property sector is under pressure as consumers tighten their belts. A growing number of retailers may not renew shop leases, so WRT’s earnings may fall. Time to take profits.

Tatts Group (TTS)

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

This company will lose its Victorian gaming licence to operate 13,750 slot machines in pubs and clubs this month. We calculate this will reduce annual profit and dividends by about 30 per cent. Take profits as a result of recent share price strength.

 

Michael Heffernan, Lonsec

BUY RECOMMENDATIONS

Crown (CWN)

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

This successful casino operator has done well in an adverse economic climate in the past few years. Its prospective link with Echo Entertainment, the owner of The Star casino in Sydney, should be an additional positive for Crown if a deal is struck to build a hotel and casino at Barangaroo in Sydney.

TPG Telecom (TPM)

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

Provides a comprehensive range of internet and related multi-media services, and has been a standout performer in the telecommunications sector so far in 2012. We expect the company to continue growing its customer base and the National Broadband Network can only work in its favour.

HOLD RECOMMENDATIONS

Technology One (TNE)

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

TNE supplies IT consultancy and software services to the public and private sectors. While smaller than TPG, its share- market fundamentals are particularly attractive, and its share price growth this year has been most impressive.

Amcor (AMC)

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

A former market darling of the late 1980s and 1990s, it fell out of favour more than a decade ago, but is now making a comeback. Despite the difficulties in overseas economies and markets in the wake of the global financial crisis, this packaging giant has managed to consolidate and move forward. Its fundamentals and prospective profit growth are positive, and it pays an attractive dividend.

SELL RECOMMENDATIONS

OZ Minerals (OZL)

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

On the plus side, this second tier low cost gold and copper producer has a relatively large amount of cash and is exempt from the minerals resource rent tax. But, on the negative side, the resources sector is finding the going particularly tough at the moment with an easing in commodity prices and a slowdown in Chinese growth.

Transfield Services (TSE)

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

This engineering and construction services company has previously benefited from the robust resources and infrastructure sectors. But more recently it announced a profit downgrade in response to weather related setbacks. The relatively subdued outlook for the mining sector and associated capital expenditure will generally restrain profit growth of mining services companies.

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