Matthew Felsman, Shaw Stockbroking
Seven West Media (SWM)
With interest rates at historic lows, high yielding stocks are rallying led by the high quality banks. I think other companies will start to play catch up. Fundamentally and technically, Seven West Media appeals. Recently, the fully franked stock was yielding 8.3 per cent. It bounced off all time lows in December, and recently broke through one month highs. The shares finished at $1.375 on February 11. Buy.
Westfield Corporation (WFD)
With a portfolio of properties in the US and a development pipeline that will generate profits in US dollars, Westfield will benefit from the exchange rate after recently selling a 47 per cent stake in the US regional malls. Offers a reasonable yield of about 3 per cent.
Commonwealth Bank of Australia (CBA)
It continues to deliver to shareholders after reporting its first half result. Revenue is up 5 per cent and cash earnings rose 8 per cent to $4.62 billion. The fully franked dividend is up 8 per cent to $1.98. With its defensive status as Australia’s largest bank and its fully franked dividend, we expect this stock to continue doing well.
Telstra Corporation (TLS)
This stock with bond like characteristics is a simple play on the yield-hunting trend. With commodity prices continuing to decline (and possibly falling further), Telstra is a clear alternative to parking funds in the bank or buying a fully priced stake in one.
Retail competition is fierce so generating growth will become increasingly challenging. The Masters hardware chain is a work in progress and it will take longer than expected to contribute meaningful earnings. On top of this, the Australian economy is subdued.
BHP Billiton (BHP)
Big call I know on this global miner. A price taker in the sense that regardless of how fundamentally sound the company is, the success of the business is leveraged to the price of underlying commodities. With oil, iron ore and copper all down more than 20 per cent in the past 12 months amid stabilising demand, valuing this stock on elevated commodity prices may be dangerous.
Janine Cox, Wealth Within
Independence Group (IGO)
Long term, this diversified miner has struggled to clear strong resistance at around $5. However, this month strong buyer demand pushed it through. Short term resistance exists at around $5.50, and overhead, IGO is likely to trade between $5.70 and $6.40. The shares finished at $5.24 on February 11.
Aveo Group (AOG)
AOG has traded sideways below an important resistance level at around $2.35 since November 2013. On numerous occasions, the price pulled back to test support at around $1.90, and each time the stock recovered, which is a good sign. Therefore, should AOG break strongly above this level, a continuing rise and an opportunity to profit is likely. Shares in the retirement village group finished at $2.31 on February 11.
WES has been Australia’s heavyweight favourite in the consumer staples sector. It weathered the market decline in September through October quite well, unlike Woolworths, whose share price was heavily sold off. Given Wesfarmers’ resilience and potential upside, the stock remains a hold.
Aristocrat Leisure (ALL)
Buoyed by an improving exchange rate from its perspective, this gaming machine stock has continued to rise. The share price has traded sideways from October 2013 until this month, where it’s been trading above the level of a previous all time high in August 2001. Given the strength of the rise, there’s currently no reason to sell. The shares closed at $7.10 on February 11.
Top Australian Brokers
IRE is very interesting from a technical analysis perspective, in that there’s a large price gap between $9 and $9.30 on the daily chart. Provided the share price continues to rise, this isn’t a concern. However, a strong close back below $10 is a sell signal, and is likely to indicate a quick return to fill the gap. IRE finished at $10.55 on February 11.
CRZ’s share price has made higher lows and lower highs in the past year, and the range of swings up and down has narrowed. This can only mean one of two things will occur; either it will break on the upside or the downside. Therefore, a strong close below $9.82 would reflect a sell-off has started and a good time to take profits. The shares finished at $10.34 on February 11.
Michael Heffernan, PhillipCapital
Transurban Group (TCL)
Australia’s premier toll road operator delivered an impressive December quarter traffic report. Its revenue expectations are robust, following the acquisitions of Queensland toll roads and Sydney’s Cross City tunnel at a good price. The Federal Government’s commitment to road expenditure adds to its appeal.
A most impressive recent report propelled its share price, and improving US economic growth should add to this rubber glove and condom maker’s profitability, despite a muted European economic environment. Lower rubber prices and a stronger US dollar are bonuses.
Slater & Gordon (SGH)
Australia’s first listed legal firm, and one of the best mid capitalisation share price performers in the past 12 months. Recent acquisitions in the UK continue to build on its past successes, while its domestic operations are also progressing well.
Aristocrat Leisure (ALL)
This designer and producer of gaming machines and operator in the online gaming market recently delivered an impressive half year report. Furthermore, the acquisition of the US gaming business, Video Gaming Technology, looks to be a good deal, particularly with continuing improvement in the US economy.
This iconic retailer delivered an underwhelming trading result and the Masters hardware investment is taking longer than expected to break even. The key to its performance will be its report in late February, but irrespective of its result Wesfarmers is preferred.
Provides civil, structural and environmental engineering services to mining companies. It recently announced a profit downgrade due to a slowdown in capital investment in the resources sector. A turnaround in profit outcomes would appear to be some time off.
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