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Scott Marshall, Shaw Stockbroking

BUY RECOMMENDATIONS

Aurizon (AZJ)

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

AZJ intends to update the market about its coal contracts and progress with its access price undertakings. An improved contract structure will provide profit upside from 2017. AZJ is targeting a 25 per cent operating profit margin by the end of 2015. This compares favourably to 19 per cent in the 2013 half. Short term profit upside is expected from ongoing cost reductions.

Woodside Petroleum (WPL)

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

The cash flow turnaround is on schedule, providing scope for a special dividend or share buy-back. We also see potential acquisitions in both oil and gas. WPL has been an outstanding performer in project delivery and reliability. Pluto marks the end of a major capital investment period.

HOLD RECOMMENDATIONS

ANZ Bank (ANZ)

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

ANZ releases its first half profit result on April 30. We expect a profit of $3.1 billion and a dividend of 68 cents. But in our view, institutional and business banking appears to be pressure points for ANZ, with weak margins, fees and rising bad debts compared to Commonwealth Bank and Westpac.

Myer Holdings (MYR)

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

MYR remains one of the best managed department chains in Australia, and has several growth strategies. MYR has established product differentiation. Its developing online capability involves minimising competition risk and it has cut operating costs. We are forecasting 3 per cent earnings growth in 2013, followed by 7 per cent growth in 2014 based on a stronger retail environment and growth initiatives currently underway.

SELL RECOMMENDATIONS

Fleetwood Corporation (FWD)

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

We don’t see any compelling positive share price catalysts in coming months and we believe the valuation is very stretched. The half year profit result was disappointing, and the outlook is only for “an improved result” going forward. The company may review the dividend down.

Iluka Resources (ILU)

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

ILU continues to face volatile market conditions for all of its mineral sands products for at least the next six months. Although zircon pricing may start to stabilise, the outlook for titanium dioxide remains unfavourable.

 

Boe Campion, Ord Minnett

BUY RECOMMENDATIONS

Tabcorp (TAH)

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

Since the start of the 2013 calendar year, Tabcorp has lagged the broader industrial market. This doesn’t seem justified given the interim result confirmed an outlook for steady revenue growth. Tabcorp is trading on the cheapest price/ earnings ratio among its peer stocks and offers upside to our 12-month price target of $3.52. We have upgraded to a buy recommendation.

Village Roadshow (VRL)

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

Village Roadshow posted an impressive interim result, reporting normalised profit growth of 11 per cent to $34.7 million. It was ahead of our expectations. We continue to rate Village as a buy, as the business is an appealing exposure to consumer spending at a time when traditional retailers are struggling. Many of the experiences that Village offers cannot be purchased online.

HOLD RECOMMENDATIONS

UGL (UGL)

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

Growth in operations and maintenance and property should provide greater stability and visibility for group earnings. However, even accounting for the recent slowdown, we believe UGL has lost leverage to capital expenditure in the resources sector and faces more subdued market conditions in infrastructure.

Telstra (TLS)

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

Coalition plans for the National Broadband Network don’t have a major impact on our valuation for Telstra, but they would compress its cash flow and earnings profile. Accordingly, we believe this presents a case for share buy-backs over the ordinary dividend as a way of increasing distributions to shareholders.

SELL RECOMMENDATIONS

WorleyParsons (WOR)

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

WOR is well positioned in the medium to longer term to benefit from a large pipeline of work in its core hydrocarbons markets. But we feel the current share price fully factors in the medium term growth outlook and WOR’s competitive advantages without taking into consideration near term risks.

Boral (BLD)

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

We’re concerned the BLD share price appears to be running well ahead of the domestic housing cycle. Boral chief executive Mike Kane believes it’s difficult to predict a recovery in the Australian housing market due to current volatility. We also note that Boral’s US business is likely to stay loss making for longer as the company upwardly revised its “break-even” number of US housing starts by 10 per cent.

 

Les Szancer, blueribbonoptionsonline.com

BUY RECOMMENDATIONS

Condor Blanco Mines (CDB)

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

This Chile miner picked up an iron ore tailings project for peanuts when the iron ore price was very low last year. We soon expect it to announce the successful party to an offtake agreement. This should generate good profits each month for the next four to five years. They’re also diamond drilling at 4000 feet 24 hours a day at Carachapampa in search of gold, silver and copper. Certainly not for the risk averse.

Victory Mines (VIC)

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

Recently listed, the share price has taken a beating. The company is involved in copper, nickel, gold and rare earth projects in Western Australia. The company cleverly joint ventures projects. Closing at 4.5 cents on April 17, I believe this company provides a top value opportunity as it’s been oversold. Investors with a healthy appetite for risk could consider adding VIC to their portfolios.

HOLD RECOMMENDATIONS

Billabong International (BBG)

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

Questions everywhere here. Why did it reject an offer of $3.30 last year?  The share price kept falling and now a 60 cent offer is on the table. I doubt it will get a better offer. Since going public, this company has been on a rather rocky road. The reason I’m saying hold is, at the time of writing, the offer is higher than the current price. The shares closed at 50 cents on April 17.

Ten Network (TEN)

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

A toss up between a hold or sell. I’m going for a hold as the new boss has plans to take the company in a fresh direction. It will be going for an older demographic. That doesn’t guarantee success, but at least it’s trying something different. In the past both Nine and Seven have reinvented themselves.

SELL RECOMMENDATIONS

Sundance Resources (SDL)

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

The deal with Hanlong has collapsed. Sundance needed Hanlong to bring its West African Mbalam iron ore project to fruition. Sundance may be talking to other potential suitors. However, it spent two years with Hanlong. There’ more certainty in resource companies elsewhere.

Boart Longyear (BLY)

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

This mining drilling provider is a very popular trading stock. If you look at a 12 month chart, spikes aside, it’s in a severe downtrend. The company’s success depends on the mining industry being an aggressive explorer. Obviously traders aren’t impressed as the stock is significantly down this year.

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.