James Samson, Lincoln Indicators


Credit Corp Group (CCP)

A debt collection and consumer lending business. For the second half, the company recently upgraded net profit expectations to between $37 million and $38 million, representing healthy growth on 2014. We believe that CCP’s strategy of focusing on the domestic PDL (purchased debt ledgers) market, consumer lending book growth and longer dated objectives for US expansion provides management with many potential levers to grow the business. As such, we remain confident CCP is attractive to investors at current prices. The shares closed at $11.40 on May 6.

Corporate Travel Management (CTD)

Provides travel services to corporate clients and has now established a global footprint through acquisitions. The company reported net profit of $10.9 million for the half year, and is expected to grow this further in the second half. Recent acquisitions in the US and Asia will enable the company to tender for larger regional contracts and open avenues to further growth. The share price has underperformed since March and is now approaching levels that are attractive for growth focused investors. The stock closed at $10.50 on May 6.


GBST Holdings (GBT) 

Responsible for back and middle office financial market systems and wealth management platforms in Australia and abroad. The group reported strong interim results in February, with revenue growing 14 per cent to $55.7 million. Net profit grew 58 per cent to $6.9 million. We believe the business is well placed following strong growth in UK markets and there’s potential to grow in the US. The company still holds a promising future, but at current prices appears fully valued.

OzForex Group (OFX)

Provides low cost foreign exchange and transactional services through an online platform. A strong market position will enable it to continue providing services at competitive rates. Losing an agreement with a key banking partner and CEO Neil Helm resigning have harmed sentiment. However, it remains a profitable and well run business.


Beach Energy (BPT)

Recent strong performance has enabled this oil and gas producer to retain profitability. In our view, lower oil prices remain an issue and caution is warranted in the sector. While BPT has some high quality assets, we’re concerned as to the value of the company’s gas interests given current energy prices.

Vocus Communications (VOC)

In recent years, this telecommunications services provider posted strong profit and share price growth. And a recent deal to merge with competitor Amcom Telecommunications (AMM) has driven the share price higher. Despite an in-principle agreement, rival TPG Telecom has increased its stake in AMM to 18.6 per cent, which has the potential to block the deal. We believe much of the short term merger and acquisition upside is factored into the VOC share price, yet downside exists as a result of the potential TPG Telecom blocking stake.


Michael Heffernan, PhillipCapital


DuluxGroup (DLX)

This iconic paint company has performed particularly well in recent years since its demerger from Orica. It’s set to benefit from a stronger residential building sector. It offers attractive fundamentals and a fully franked dividend yield above 3 per cent.

Telstra (TLS)   

The recent share price decline and only partial recovery represents an opportunity to buy a strongly performing stock with an attractive fully franked dividend. The action in second tier telecommunications stocks adds market tension and excitement to the sector.


Macquarie Group (MQG)

This second tier Australian bank is more diversified than the four majors, and has been a very strong sharemarket performer in the past 12 months. Any improvement in overall sharemarket activity should lift revenue and profit. It generates significant revenue in the US, so a stronger greenback is a bonus.


While AMP has been a perennial disappointer since listing in 1998, the outlook for this insurance and wealth management company appears a little brighter. The change in fortune is largely attributable to positive market sentiment, an impressive half year result and benefits flowing from the AXA Asia Pacific takeover.


Hills Limited (HIL)

This home products business is doing it tough and recently delivered a disappointing downgrade. It advised that second half earnings will be lower than the first and revised guidance for the full year is for an underlying net profit after tax of between $11 million and $14 million. Its profitability is likely to remain under pressure until the economy shows a sustained improvement.

Decmil Group (DCG)

As it builds accommodation villages for miners, it’s adversely affected by cut backs in investment spending by major resources companies. Other sectors are preferred in the current market and economic environment.


Andrew Arvanitopoulos, Alpha Securities


Sydney Airport (SYD)

We anticipate international passenger growth of almost 4 per cent a year for the long term. Our view is supported by expansion of Chinese bilateral air rights announced in early 2015 that triples seat capacity between Australia and China. We assume growth rates ramp up from below trend growth of 2.6 per cent in 2014 to higher rates in 2017.

ResMed (RMD)

A medical device company treating sleep disordered breathing. Strong flow generator sales in the US overshadowed weaker mask sales in the March quarter. New products are gaining traction faster than expected. We remain optimistic masks will return to low single digit growth in the US. Gross margins are also expected to improve significantly into financial year 2016 as a result of efficiency gains.


Insurance Australia Group (IAG)

The downside is recent storms in NSW will leave the company with hefty insurance claims likely to be about $250 million. Such is the nature of this industry. But substantial synergies flowing from the Wesfarmers insurance buy should help cushion the blow.

Wesfarmers (WES)

Retailers Coles, Bunnings, Kmart and Officeworks posted sales growth in the March quarter. A good company to hold following another cut in interest rates. But generating sales growth going forward will be tougher as Woolworths is determined to improve its operations.


Ten Network Holdings (TEN)

A television licence impairment of $251.2 million left the network posting a $264.4 million loss in its half year results. Net debt was $92.3 million. Ten remains seriously challenged in competing with rivals in free-to-air TV. Better media options elsewhere.

ALS Limited (ALQ)

ALS has announced a 21 per cent fall in unaudited net profit after tax to $135 million for the full year. Management has also disclosed a likely $290 million impairment will be taken against the carrying value of oil and gas investments. The impairment is no surprise, but the downside is capital expenditure continues to be wound back in the oil and gas sector.

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