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Les Szancer, Blueribbonoptionsonline.com

BUY RECOMMENDATIONS

Newcrest Mining (NCM)

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

This stock was trading above $40 more than a year ago. On August 23, 2012, it was trading at $26.27. So why would I recommend it as a buy? Because, as Australia’s largest gold producer, Newcrest is perfectly positioned to take advantage of a gold price surge when it inevitably happens in this uncertain world.

BHP Billiton (BHP)

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

Another commodity stock that’s significantly retreated to $33 levels on August 23. The company’s full year net profit fell by more 33 per cent to $US15.4 billion, and its shelved multi billion dollar Olympic Dam expansion plans in South Australia. But unlike many other mining companies, BHP isn’t a one trick pony, having fingers in many different pies. The company has made some expensive mistakes, but a behemoth such as BHP can absorb these.

HOLD RECOMMENDATIONS

Commonwealth Bank  (CBA)

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

The bank’s share price has put on about $2 in the past 12 months. It pays a reasonable dividend and there’s no reason to suggest this will change any time soon. Other major banks are often touted as the way to go, but there’s something about this brand that compels me to stick with CBA.

Telstra (TLS)

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

Unlike a lot of other stocks, Telstra has enjoyed a steady uptrend in the past 12 months. It still pays a nice dividend and is an excellent superannuation stock. If you happen to get some capital growth as well, then that’s a bonus. The shares were trading at $3.73 on August 23.

SELL RECOMMENDATIONS

BlueScope Steel (BSL)

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

The share price did have a bit of a bounce. The steelmaker has posted a $1 billion loss yet again. BSL has entered into a $1.4 billion joint venture with Nippon Steel. I wonder where the share price would have gone without that announcement!

Qantas (QAN)

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

The share price has been severely punished and for good reason. The national carrier announced a $245 million full year loss on August 23. The chief executive isn’t going to take his bonus this year – a fashionable trend for CEOs lately. To cut costs, it will cancel firm commitments for Boeing 787 aircraft. Simply, better investments elsewhere.

 

Brendan Fogarty, Alto Capital

BUY RECOMMENDATIONS

Ventnor Resources (VRX)

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

This junior base metals company has recently attracted strong interest in the speculative sector. Ventnor’s Thaduna and Green Dragon copper deposits are in good territory, just 40 kilometres east of Sandfire Resources’ large DeGrussa deposit. Drilling at Thaduna and Green Dragon has so far produced impressive results. Expect a strongly upgraded JORC (Joint Ore Reserves Committee) resource statement by the end this quarter, and a hint of corporate activity – with the likes of Sandfire a realistic prospect going forward.

Hawkley Oil & Gas (HOG)

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

This junior oil and gas developer has been producing sound cash flows for some time from its Ukraine based gas operations. Drilling of its exploration well at Sorochynska-202 has so far produced encouraging gas readings. This may cause a jump in share price on completion of logging and wire line testing.

HOLD RECOMMENDATIONS

Tatts Group (TTS)

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

Those who wisely bought higher yield value driven stocks, such as Tatts Group and Telstra, are now benefiting from the recent surge in prices. Tatts, in particular, has enjoyed a good recent lift to the point where it now offers a solid income hold, but less long-term value. We forecast a half yearly dividend of between 11 cents and 12 cents in early September.

Woodside Petroleum (WPL)

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

This premier oil and gas company has lately experienced a good recovery. The recently proposed equity sale of Chevron’s Browse joint venture stake to Shell has re-rated Woodside’s own stake in the venture. Hold for further upside in the Browse joint venture amid an uncertain macro economic environment.

SELL RECOMMENDATIONS

BlueScope Steel (BSL)

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

BlueScope’s recently reported headline loss of $1.04 billion after tax highlights the rationalisation this industry faces. Large capacity increases, particularly out of China, have weighed heavily on the steel market, and will do so for some time.

Fairfax Media (FXJ)

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

The structural decline in the print sector has seen online media companies strongly outperform their old school peers. Fairfax hasn’t shown it can take advantage of the online juggernaut. Avoid until its overall business strategy expands to reveal a greater online emphasis. On August 23, the company reported a net loss after tax of $2.732 billion, including a non-cash impairment charge of $2.798 billion.

 

Marcus Obermeder, Ord Minnett

BUY RECOMMENDATIONS

Brambles (BXB)

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

Although BXB announced its full year 2013 operating earnings guidance about 6 per cent below our previous estimates, this was still a solid outcome. We estimate full year 2013 operating earnings of $US1.056 billion, which implies 8 per cent growth on full year 2012.  Although macro conditions remain challenging in key regions, double-digit growth in emerging markets and reusable plastic containers should provide the impetus for continued growth.

Paladin Energy (PDN)

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

Balance sheet concerns were holding back this uranium producer. The recent off-take agreement with an unnamed major utility to deliver 13.73 million pounds of uranium oxide between 2019 and 2024 has alleviated most of these concerns. Part of the proposal includes a $US200 million pre-payment to Paladin, which should provide sufficient funding to pay a convertible bond due in March 2013.  Its share price is now free to advance on the back of underlying uranium prices.

HOLD RECOMMENDATIONS

Adelaide Brighton (ABC)

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

First half earnings disappointed, with net profit 8.6 per cent below our expectations of $70 million. It was sold off sharply from highs above $3.30. Although it’s too early to turn positive, I wouldn’t shed the stock either. ABC remains one of the sector’s strongest companies and continues to pay solid fully franked dividends. ABC will now have to prove it can effectively manage structural change within the industry.

Ansell (ANN)

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

ANN released a full year net profit result within company guidance of $133 million, but only on the back of a one-off profit, which highlighted earnings quality issues. ANN forecasts an improvement to earnings guidance for 2013 on expected higher latex prices.

SELL RECOMMENDATIONS

Cochlear (COH)

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

Although a market darling stock for many investors, this bionic ear maker released an uninspiring result, signalling  slowing growth in the second half of full year 2012. Hedge book gains are becoming more difficult to generate. Now is the time to take some profits and switch to other stocks with more upside in the sector.

BWP Trust (BWP)

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

Although BWP reported a 25 per cent increase in full year distributable profits (ex property sales) to $70.5 million, this was mostly due to acquisitions. Granted, BWP trades on an attractive 7 per cent dividend yield. But with cap rates softening and a trading price 5 per cent above net tangible assets on August 20, we see better return prospects elsewhere in the sector. Take profits.

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