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Scott Marshall, Shaw Stockbroking

BUY RECOMMENDATIONS

Rio Tinto (RIO)

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

Delivered a strong quarterly September production report across the board. Iron ore, copper and aluminium production increased. RIO continued a strong period of delivering on project growth and record sales volumes. There’s no change to our price target of $74 a share. The shares finished at $63.65 on October 23.

Transurban Group (TCL)

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

TCL is a low risk toll road operator in Victoria, NSW and Washington in the US. The I-95 toll road is being constructed in Washington and the completed 495 toll road is currently ramping up patronage. In the short term, TCL could manage Sydney’s reinstated tolls on the M4 and acquire the Cross City Tunnel. The East West Link in Melbourne and WestConnex in Sydney may provide long term construction opportunities.

HOLD RECOMMENDATIONS

Commonwealth Bank (CBA)

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

We expect low interest rates for some time. The company’s residential loan book has never been in better shape, with 90-day arrears at an all-time low. Housing loan volumes are picking up, but flat net interest margins in 2014 would be a good outcome. Expect regional and non-bank lenders to start taking back market share. CBA is a quality franchise, but is fully valued.

Santos (STO)

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

STO is a long term production growth story, with overall guidance to 70 million barrels of oil equivalent by the end of 2015 and up to 90 million barrels by 2020. Also, average gas prices are rising. Major growth projects remain on target.
Expect first LNG from Papua New Guinea in the second half of 2014.

SELL RECOMMENDATIONS

Monadelphous Group (MND)

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

Fiscal year 2013 was disappointing, particularly in regards to the outlook statement and final dividend. Profit guidance for 2014 was vague in our view. The company expects “moderating” (weaker) revenues. Profit margins contracted from 10.4 per cent to 9.4 per cent due to tightening market conditions and underperformance across several transmission pipeline projects. It’s trading at a premium.

ALS Limited (ALQ)

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

This analytical laboratory testing service company recently provided guidance for its first half 2014 profit. It expects NPAT of between $95 million and $105 million – effectively a downgrade of between 10 per cent and 20 per cent versus market estimates. We expect Australian activity to remain subdued, particularly in the coal sector, where ALS has a several contracts about to finish and may be priced lower upon renewal.

 

Michael Heffernan, Lonsec

BUY RECOMMENDATIONS

Wesfarmers (WES)

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

This retail and industrial giant has weathered recent economic difficulties particularly well. Diversification through its retail, insurance and other industrial businesses place it in a sound position for the future. Also, an improving residential construction sector is good for its Bunnings business.

Sydney Airport (SYD)

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

This operator and majority owner continues to benefit from increasing air travel due to lower fares. Revenue from car parking and its extensive retail offering provides an excellent income stream. Its future looks bright, particularly if global economies continue to improve.

HOLD RECOMMENDATIONS

Crown (CWN) 

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

Refurbishing Melbourne’s Crown Casino, expanding its casino in Perth and a strongly performing Macau provides a healthy measure of financial robustness. The possibility of a new casino in Sydney in the next few years continues to underpin buoyant expectations.

National Australia Bank (NAB)

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

NAB has been a top share price performer this year. If the UK economy continues to improve, NAB should consolidate further. With its report due in a couple of weeks, the share price is likely to strengthen in anticipation.

SELL RECOMMENDATIONS

Myer Holdings (MYR)

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

The share price has recently rebounded after it was savaged most of the year. While lower interest rates and improving consumer confidence should provide extra momentum, the company’s recent report was uninspiring. Other retailers appeal more.

OZ Minerals (OZL)

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

A copper and gold producer that’s finding it particularly tough in response to weaker commodity prices and the limited life of its Prominent Hill mine. If the bigger resource companies on the ASX are struggling, the difficulties facing OZ Minerals can’t be underestimated.

 

Les Szancer, Blueribbonoptionsonline.com

BUY RECOMMENDATIONS

Lamboo Resources (LMB)

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

Develops high purity flake graphite. LMB has four high grade JORC resources in Australia and South Korea. Consumer electronics companies need as much pure flake graphite as they can get. A lithium battery is about 85 per cent flake graphite. Lamboo’s flake graphite is pure. Lamboo is currently drilling and expects solid returns in future. Specualtive.

Jatenergy (JAT)

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

An energy company with cash flow from biofuel production and Indonesian coal. It’s looking to increase production for both projects, and there’s blue sky upside in its coal conversion technology. Jatenergy has just sold a coal project for $1.8 million, which it will receive in December. Not bad for a company with a market capatilisation of $2.6 million. A company for those with an appetite for risk.

HOLD RECOMMENDATIONS

Condor Blanco Mines (CDB)

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

Holds investments in high growth mining and exploration opportunities in Chile. Its iron tailings project is about to go into production, so I expect the company will soon be cash flow positive. Not to mention the exploration upside from its world-class copper/gold projects neighbouring the likes of Kingsgate Consolidated.

Poseidon Nickel (POS)

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

As the name implies, Poseidon is a nickel company with almost 300 square kilometres of leasehold in Western Australia.  Andrew Forrest, of Fortescue Metals fame, is a big investor. He has a very good track record and I don’t believe a man of his wealth and experience would be involved unless he was confident of a good result.

SELL RECOMMENDATIONS

QBE Insurance (QBE)

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

Why am I saying sell QBE? It’s not because I think it’s a bad company. Quite the opposite, it’s well managed. Bushfire season has come early this year. I believe insurance companies are only a disaster or two away from taking a hit.

Qantas (QAN)

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

Seriously, this company’s share price is most disappointing. While the broader market is reaching fresh highs, the Qantas share price continues to struggle. I think many people buy this stock because Qantas is an Australian icon. Is that really a good reason?

Click on the links below to read other articles from this week’s newsletter

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2. How to bet on a resources recovery: Few sectors of the market are as challenging as…

3. 18 Share Tips – 28 October 2013: 18 Share Tips to BUY, SELL & HOLD from…

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5. In the corporate fight club, the environment usually loses: In NZ a river was recently recognised…

6. Why interest rates aren’t as low as they seem: We think many investors and borrowers suffer…

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8. Top 10 shorted stocks: Each day we feature the top 10 shorted stocks…

9. Stocks on a roll: ASX rolling 52-week highs for the previous…

10. Stocks on the slide: ASX rolling 52-week lows for the previous…

 

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.