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Richard Batt, Shadforth Financial Group

BUY RECOMMENDATIONS

QBE Insurance (QBE)

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

QBE has a solid business model and has outperformed most global peers over the long term. The company has a strong operational management team and is well versed in assessing risk. The new chief executive John Neal brings a fresh approach to the management team, while the company has a solid balance sheet.

M2 Telecommunications Group (MTU)

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

Supplies a broad range of telecommunication products and services to retail and wholesale markets. A niche player, MTU has a successful track record of specialising in the small-to-medium business segment, with a focus on service, execution and education for its clients, which differentiates it from competitors. This provides a growth opportunity and it’s an ideal exposure to the telecommunications sector for long-term portfolios.

HOLD RECOMMENDATIONS

Incitec Pivot (IPL)

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

Its vast distribution network for delivering products to market is an advantage. The outlook for explosives is positive, with demand from the resources sector expected to remain strong for many years. We suggest investors retain their exposure.

Fleetwood Corporation (FWD)

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

This portable accommodation company benefits from continuing growth in the retirement, recreation and resource sectors. The company has the capacity to generate strong cash flow amid very minimal capital expenditure requirements. It continues to pay special dividends, making FWD an attractive yield play for long-term investors.

SELL RECOMMENDATIONS

Perpetual (PPT)

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

PPT’s share price has rallied significantly in the past 12 months on the back of improving funds under management and the recent strength on the ASX. But given PPT’s reliance on the direction of equity markets, particularly the Australian market, we suggest investors take advantage of the recent price increase and lock in some profits.

Fortescue Metals Group (FMG)

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

Since the start of December, FMG’s share price has risen more than 20 per cent on the back of a stronger iron ore price. Investors should take advantage of this uptick in price as FMG has a weaker balance sheet compared to its peers, and we believe better opportunities exist elsewhere in the sector.

 

Peter Moran, Wilson HTM

BUY RECOMMENDATIONS

Woodside Petroleum (WPL)

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

Woodside’s profile is gradually being de-risked as evidenced by a recent improving performance at its Pluto 1 field and last month’s announcement that PetroChina had bought BHP’s stake in Browse LNG for $US1.63 billion.  We believe  PetroChina paid a premium, implying Woodside’s stake in Browse is under valued. With operational performance improving amid numerous growth options, the outlook appears bright.

Strike Energy (STX)

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

Strike offers top exposure to Eagle Ford and Permian Basin shale in the US. It also offers coal seam gas potential from the southern Cooper Basin in South Australia. Strike is trading at a substantial discount to its ASX peers on a valuation per acreage and resource basis. We recommend as a buy for the more speculative portion of an investor’s portfolio.    

HOLD RECOMMENDATIONS

Newcrest Mining (NCM)

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

Newcrest offers an attractive growth profile and long term exposure to an unhedged and potentially rising gold price. But with several operations running below target, and with Lihir and Cadia East remaining in the construction/commissioning stage, we remain cautious.

ASX Limited (ASX)

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

Equity market turnover remains soft and competitor Chi-X continues to gain market share. On the positive side, derivatives volumes have been growing strongly and secondary market capital raisings have been offering some support. Limited growth is expected, but we’re forecasting a 5 per cent dividend yield, which is behind our recommendation.

SELL RECOMMENDATIONS

Fortescue Metals Group (FMG)

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

The Fortescue share price has rallied recently in response to asset sales and a bounce in the iron ore price. In our view, the iron ore price is likely to retreat following an end to re-stocking ahead of the Chinese New Year next month. As such, we see the FMG price as being fully valued.

GWA Group (GWA)

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

The share price of this supplier of building fixtures and fittings has bounced about 30 per cent since a restructure was announced in December. While the restructure is positive, slow residential growth and competition from cheap imports mean conditions remain difficult and the bounce has been overdone. Sell.

 

Cleo Nanni, Alpha Broking

BUY RECOMMENDATIONS

QBE Insurance (QBE)

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

A well managed company in the global general insurance and reinsurance industry, with an enviable track record of strong earnings. Its earnings and dividend growth were once without peer in the insurance industry, but have slowed in the past three years. The recent share price action has been volatile, but look for a strong rally on a close above $12. The shares closed at $11.47 on January 16.

Newcrest Mining (NCM)

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

Newcrest has long life reserves and is targeting between 5 and 10 per cent annual gold production growth over the next five years. The recent share price action indicates the stock has been oversold. We suggest accumulating at these low levels. The shares closed at $22.65 on January 16.

HOLD RECOMMENDATIONS

National Australia Bank (NAB)

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

The share price has put on solid gains since November to close at $25.85 on January 16. This stock could climb if NAB sorts out banking problems in the UK, or the global economy improves. Dividend yield is more attractive than term deposits.

Westpac Bank (WBC)

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

This stock has also rallied since late last year to close at $26.43 on January 16. Besides the potential for more capital growth, the dividend appeals for its consistent increase and franking credits.

SELL RECOMMENDATIONS

Harvey Norman (HVN)

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

Online competition will continue testing traditional bricks and mortar retailers. Shoppers are cautious despite lower interest rates. Big-ticket items will become increasingly harder to sell until confidence improves. Better options elsewhere.

BlueScope Steel (BSL)

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

It’s trying to cut costs by retrenching workers. Manufacturing looks too challenging in times of a high Australian dollar and cheap imports. Turning this company around is a long term initiative. This market doesn’t have the patience. Plenty of other stocks offer far more appeal.

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