James Samson, Lincoln Indicators
BUY RECOMMENDATIONS
Blackgold International Holdings (BGG)
Chart: Share price over the year to versus ASX200 (XJO)
BGG is a coal production company with operations in China boasting a significant reserves base. With big plans to ramp up production amid a tightly held investor base, the potential for BGG is significant. While it trades at a large discount to its valuation, in response to coal prices remaining weak and BGG’s plans remaining highly contingent on price movements, this stock isn’t for the faint-hearted.
Ausenco (AAX)
Chart: Share price over the year to versus ASX200 (XJO)
When the market endures increasing volatility, mining services stocks are often sold off indiscriminately. AAX has experienced a dip in its share price lately and subsequently appears to offer investors a value opportunity. This company is currently our preference in the mining services sector, as its revenue is well diversified in terms of its commodity exposure and geography.
HOLD RECOMMENDATIONS
ALS Limited (ALQ)
Chart: Share price over the year to versus ASX200 (XJO)
The jury is out on how ALQ will be impacted by the slowdown in mining sector expenditure. Traditionally, a minerals testing business, ALQ has worked hard to increase its diversification into food and medical testing. We recommend adopting a wait-and-see approach. The company’s half year results are expected in late May.
BWP Trust (BWP)
Chart: Share price over the year to versus ASX200 (XJO)
BWP provides a solid revenue stream through its property portfolio yield and trust structure. While the company retains a high degree of certainty and a strong relationship with its tenants, its share price has recently reached new heights.
SELL RECOMMENDATIONS
Macquarie Group (MQG)
Chart: Share price over the year to versus ASX200 (XJO)
Despite the perception of a mini recovery, the market for merger and acquisition activity in Australia has continued to deteriorate. While MQG is looking at creating value via other avenues, as exemplified by an agreement with mortgage lender Yellow Brick Road Holdings, we believe the company remains over priced given the earnings risk involved.
Virgin Australia Holdings (VAH)
Chart: Share price over the year to versus ASX200 (XJO)
With growth prospects in a holding pattern pending further news from the ACCC on the company’s stake in Tiger Airways, we believe the risks are continuing to mount for VAH. Jetstar Airways continues to perform profitably, and a competitive market continues to impact VAH’s margins. We believe there are better opportunities on the market than companies in the airline industry.
Michael Heffernan, Lonsec
BUY RECOMMENDATIONS
CSL (CSL)
Chart: Share price over the year to versus ASX200 (XJO)
This world-class blood plasma business with its “rivers of gold” royalty stream recently delivered an excellent recent, and its share price responded accordingly. Company prospects are good and it should eventually benefit from a stronger US dollar in line with an improving US economy.
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iiNet (IIN)
Chart: Share price over the year to versus ASX200 (XJO)
An internet service provider that’s also involved with many facets of the telecommunications industry. In the past few years, it’s made several value accretive acquisitions. The National Broadband Network should also prove a beneficial driver for its operations.
HOLD RECOMMENDATIONS
ASX (ASX)
Chart: Share price over the year to versus ASX200 (XJO)
Despite difficulties of lower equity turnover, competition from new entrants and negative investor sentiment, ASX produced a workmanlike December half year report. Furthermore, ASX’s revenues should be bolstered by the combined effect of stronger sharemarket prices and additional capital raisings that this encourages.
AMP (AMP)
Chart: Share price over the year to versus ASX200 (XJO)
While AMP has been a perennial disappointment since listing in 1998, we expect better times for this iconic insurance and wealth management company. The change in fortune is largely attributable to positive market sentiment and activity. The AXA takeover should also start adding value to its business.
SELL RECOMMENDATIONS
Atlas Iron (AGO)
Chart: Share price over the year to versus ASX200 (XJO)
This mid-tier iron ore producer is adversely impacted by significant capital expenditure commitments. Also, constrained revenue due to softening iron ore prices, in response to China’s easing growth prospects, is playing a part. The immediate future looks challenging and other sectors are preferred.
OZ Minerals (OZL)
Chart: Share price over the year to versus ASX200 (XJO)
A copper and gold producer that’s finding it particularly tough at the moment amid easing commodity prices and the limited life of its Prominent Hill mine. If the biggest resource companies on the ASX are struggling, the difficulties facing OZL cannot be underestimated.
Richard Batt, Shadforth Financial Group
BUY RECOMMENDATIONS
BHP Billiton (BHP)
Chart: Share price over the year to versus ASX200 (XJO)
A well managed company providing investors with world class exposure to the resources sector. The share price has been under considerable pressure in recent times, with investors overlooking resource stocks in favour of high yielding companies. We suggest long term investors consider taking advantage of current share price weakness. The shares were trading at $33.89 on April 10.
Woodside Petroleum (WPL)
Chart: Share price over the year to versus ASX200 (XJO)
WPL should be the major energy exposure for any direct equity portfolio. The company’s operations cover LNG, natural gas, condensate, crude oil and LPG. Production is forecast to grow strongly as the Pluto project continues to perform well. With a strong balance sheet, the company appears undervalued at current levels. The shares were trading at $35.24 on April 10.
HOLD RECOMMENDATIONS
Atlas Iron (AGO)
Chart: Share price over the year to versus ASX200 (XJO)
AGO is the fourth largest iron ore miner on the ASX. Although the share price has fallen in recent times, we would argue that investors should retain their exposure. AGO is a potential acquisition target for local peers and diversified large cap miners.
ResMed (RMD)
Chart: Share price over the year to versus ASX200 (XJO)
Develops products for treating sleep apnoea and respiratory disorders. Earnings should continue to grow as more patients use RMD’s treatments. New product launches should also accelerate growth in the next year or so, especially in the US market. RMD is an ideal holding for growth oriented investors seeking exposure to the healthcare sector.
SELL RECOMMENDATIONS
APN News and Media (APN)
Chart: Share price over the year to versus ASX200 (XJO)
APN is a diversified media company with its primary focus on publishing. Advertising revenue is most vulnerable to market cycles. Until more signs emerge that market conditions are improving, we prefer alternative investments.
Nufarm (NUF)
Chart: Share price over the year to versus ASX200 (XJO)
NUF produces and sells crop protection products across the globe. The company is exposed to cyclical demand from agricultural markets and it has limited pricing power, which is putting pressure on margins. We prefer other investments.
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.
