Simon Herrmann, wise-owl.com
Newcrest Mining (NCM)
One of the most technically sound gold equities and Cadia Valley belongs to one of the lowest cost operations in the world. All in sustaining costs at December 31, 2014 were $917 per ounce. Cost saving incentives resulted in improved margins, which could allow for debt repayments. In the right gold price environment, NCM is expected to deliver profitable growth.
Bendigo and Adelaide Bank (BEN)
Announced strong 2015 half year results. BEN has increased net profit after tax by 90 per cent since fiscal year 2012 and is on track to achieve another year of double digit growth. We don’t expect significant capital growth in the short term, but BEN pays a solid dividend making it a conservative long term investment. The recent pullback provides us with an appropriate entry level.
Lend Lease Group (LLC)
CEO Steve McCann continues to grow the business through acquisitions and new development projects, taking advantage of opportunities in recovering markets. The company has a well established income stream and a strong balance sheet. We expect business conditions in the construction sector to remain favourable in the medium term.
Tassal Group (TGR)
Tassal’s market share accounts for more than 50 per cent of the Australian salmon market. The company aims to deliver a 15 per cent return on assets in fiscal year 2015. It will focus more on domestic expansion than volatile export markets. The stock has found strong support at $3.50, which is the lower end of its ascending channel.
Abacus Property Group (ABP)
We have recently downgraded our view from a hold to a sell after Abacus announced an entitlement offer to raise $121 million. The entitlement offer has affected our short term outlook, as we expect increasing volatility. Our long term view remains neutral. But we recommend reducing exposure in the short term. We will continue to monitor developments within the company.
Has shed jobs across its global operations as the company is focused on cutting costs rather than expansion. Expect modest declines in revenue and gross margins for fiscal year 2015. While lower commodity prices puts pressure on WOR’s metals and materials sector, investor sentiment remains negative.
Matthew Felsman, Shaw Stockbroking
Vocus Communications (VOC)
Recently the telecommunications sector was buzzing after TPG Telecom launched a takeover for smaller rival iiNet for $1.4 billion. Shares in iiNet jumped about 25 per cent in a day. When a stock jumps this much on corporate news, funds are often ploughed back into the same sector as traders and investors take profits and tweak portfolios. Vocus has good operating momentum, good valuations and steady growth.
Fortescue Metals Group (FMG)
I’m not an investor in iron ore stocks, only a trader. What we have seen lately is the iron ore price and sector continuing to fall and Fortescue gaining, a great example of firms closing out massive positions and locking in profits by buying back borrowed stock. I think there’s a short squeeze trade here, particularly if the stock rallies on positive news. Fortescue isn’t going to collapse tomorrow.
QBE Insurance Group (QBE)
The stock has risen from $11.90 in February to close at $13.15 on March 25, but we believe there’s more left in the tank. Expect the stock to benefit when US interest rates rise.
One of my favourite growth stocks. Designs and makes high performance aluminium ships and yachts, working with Australian customs and the US navy. There’s no reason to sell this stock. A stronger US dollar boosts earnings and work is contracted to at least 2018.
Qantas Airways (QAN)
A perfect combination of falling oil prices, a lower Australian dollar and a business restructure made QAN a great trade last year. Airline fundamentals make it tough to justify QAN as a long term investment given stiff competition, currency movements and capital outlays – upfront and on a continuing basis. It’s up more than 150 per cent in a year. Time to sell.
Insurance Australia Group (IAG)
Recently went ex-dividend (13 cents on March 2). This was on top of the 26-cent dividend paid in October last year. Last year, chief executive Mike Wilkins sold down his personal holdings in the company. When directors and executives sell shares in their own company, I find it difficult to conclude that the price will rise.
Gavin Wendt, MineLife
Rumble Resources (RTR)
This mineral exploration company has defined several prospective targets within Western Australia’s Fraser Range province, which are being evaluated by drilling. At Zanthus, several targets demonstrate geological and geophysical similarities to Sirius Resources’ Nova nickel copper deposit. Exploration work at the Big Red project has delineated a possible “feeder-style” target that’s potentially comparable to the ovoid mineralisation at Voisey’s Bay.
Matsa Resources (MAT)
Maintains strong exploration momentum on dual fronts within the Fraser Range. Firstly, it’s generated exciting electromagnetic survey results ahead of follow-up drilling at its Symons Hill project (less than 20km from Nova), where the combined strike length of anomalous bedrock Ni values exceeds 10 kilometres. This base metals and gold explorer has also produced encouraging drilling and down-hole electromagnetic results from its Killaloe joint venture project in WA.
Sheffield Resources (SFX)
Continues to enhance its emerging Thunderbird mineral sands project in WA via resource and grade enhancements, which should flow through to a robust pre feasibility study. There’s also strong levels of appraisal activity in respect to its Fraser Range projects, comprising its Red Bull project (within 20km of Nova) and its Big Bullocks project within the Northern Fraser Range.
Potash West NL (PWN)
Has primarily focused on its emerging, large-scale Dandaragan potash project in WA. However, more recently it’s diversified and expanded its interests via a farm-in to an advanced German potash project that offers near term potash production potential. A recent independent review has confirmed there’s very significant tonnages of high grade, near surface potash material present within the Küllstedt Licence area.
Cockatoo Coal (COK)
Has been forced to undertake a hugely dilutive 13.7-for-1 shareholder rights issue for the $125 million required to fund its Baralaba expansion project in Queensland. The rights issue is necessary as a result of the company’s failure to secure debt funding. It’s a poor outcome for shareholders, blowing out the issued share capital from an already massive 4.6 billion shares.
Lynas Corporation (LYC)
This troubled rare earths play recently reported a worse than expected half year loss of $104 million. While overall production has shown signs of improvement, forecast free cash flow remains weak. We believe the company will have ongoing issues trying to manage its debt repayments.
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