Richard Batt, Shadforth Financial Group

BUY RECOMMENDATIONS

WDS Limited (WDS)

The company is well positioned to take advantage of a major investment by leading energy companies in the stgelopment of coal seam gas and LNG projects in New South Wales and Queensland. This investment will drive demand for drilling, infrastructure and pipelines services, and WDS and its shareholders will be beneficiaries.

Tox Free Solutions (TOX)

TOX focuses on providing industrial and hazardous waste treatment, contaminated site remediation and industrial services. Tox recently announced it was Rio Tinto’s preferred vendor for supplying industrial and waste management services for the miner’s iron ore operations in the Pilbara. This is a positive step as Tox is set to benefit from increasing demand for its services. The long-term outlook for Tox and the Pilbara region is bright.

HOLD RECOMMENDATIONS

Billabong International (BBG)

Billabong has a strong brand image, providing it with a significant competitive advantage over its peers. This is then reinforced by a robust marketing campaign that includes sponsoring major surfing events. The company can endure consumer cycles and continues to deliver profits.

GrainCorp (GNC)

The company has an integrated and diversified infrastructure network, enabling it to generate value across the whole supply chain and provide value-added services to growers and other customers. Although the share price has recently fallen, its 2009 operational result was strong, and we are happy to retain exposure to this company.

SELL RECOMMENDATIONS

Flight Centre (FLT)

Australia’s largest listed travel agent relies on discretionary spending so earnings can be extremely cyclical. The share price has rallied significantly off its lows, but with increasing competition from internet-based travel agents, we see this as an opportune time to sell and examine alternative investments.

Alesco Corporation (ALS)

Alesco manages a portfolio of niche industrial product distribution businesses. A   diverse product range includes garage doors, kitchen sinks, concreting tools and water tanks. In recent times, the operating margins have been hit due to the current economic downturn. In a recent announcement, the company forecast an earnings fall in the first half of fiscal 2010 despite signs of an improving housing market. As a result, it may give up recent share price gains.

Cleo Nanni, Novus Capital

BUY RECOMMENDATIONS

Perpetual (PPT)

Offers a range of managed investment funds, financial advice and superannuation services for individuals, families, charities and institutional investors. After reviewing Perpetual’s earnings outlook, guidance is now estimated to be an after tax profit of between $35 million to $40 million. Expect the share price to rise in line with a market recovery.

Incitec Pivot (IPL)

Incitec Pivot is a fertiliser and industrial chemical company. The company recently secured $800 million of long-term funding through the US bond market and advised the funds will be used to repay its $352 million working capital facility. The remaining funds will be used to repay a portion of IPL’s $1.68 billion debt  facility. I believe there is further upside, with a share price above $3.50. In early morning trade on December 11, the stock was $3.06 a share.

HOLD RECOMMENDATIONS

Cochlear (COH)

Makes and markets cochlear implants used to stimulate impaired hearing. Growth stems from further penetration of existing markets and entry into unstgeloped markets such as South America, Eastern Europe and China. Long term growth is on track, so accumulate on dips below $60 a share.

SEEK (SEK)

As a premier online job classifieds provider – with close to 60 per cent of the Australian and New Zealand markets, Seek is leveraged to an economic recovery and is well positioned to grow in 2010. Price target is $7.50. In early morning trade on December 11, the stock was $6.71 a share.

SELL RECOMMENDATIONS

Caltex Australia (CTX)

Caltex is the market leader in the strategic petroleum refining and distribution industry in Australia. Recently, the Australian Competition and Consumer Commission announced it will oppose the proposed acquisition of 302 Mobil service stations by Caltex. This is negative news and it’s been reflected in the share price action. Sell and wait for positive news.

Coca-Cola Amatil (CCL)

Recently the company share price has been trading above $11 – my short term price target. It now seems like a good opportunity to take profits for those who bought in earlier. If the price falls below $10, then buy again. On December 11, the stock was trading at $11.13.

Alex Beer, State One Stockbroking

BUY RECOMMENDATIONS

Australian Pharmaceutical Industries (API)

API is a leading pharmaceutical wholesaler, with plans to grow its Priceline brand store numbers from 321 to 400 going forward. While API has struggled in a competitive market in the past three years, its core Priceline brand offering has grown in scale, undergoing a significant facelift along the way. With its distribution network program “revitalise” expected to generate savings from reduced handling costs, the stock appears cheap.

Metcash (MTS)

Recently announced a first half 2010 net profit after tax of $109.2 million, up 36.5 per cent on the 2009 first half. Operating cash flow was $230.3 million, a strong result given the challenge of flat prices in the past six months. Metcash is well positioned to enter the hardware retailing space, after acquiring a 51 per cent stake in Mitre 10. Metcash looks cheap given its core groceries and liquor businesses are performing well.

HOLD RECOMMENDATIONS

Goodman Fielder (GFF)

Its product range includes staples, such as bread, milk, margarine, dressings, mayonnaise and flour. With full year 2009 sales up 6.5 per cent, adjusted earnings before interest and tax was $308.9 million, representing a fall of 6 per cent (excluding restructuring costs).

Monadelphous Group (MND)  

Since the end of full-year 2009, Monadelphous has secured new contracts valued around $400 million. While the short-term outlook is flat or slightly negative, Monadelphous is particularly well run and offers a strong balance sheet. Any price weakness in the next 12 months would present a decent entry point into a very attractive business.

SELL RECOMMENDATIONS

David Jones (DJS)

Luxury goods sales could still slow as customers continue to tighten their belts. Christmas is still a key period and interest rates have ticked up again. As David Jones is trading on a forecast full year 2010 price/earnings ratio of 17 times, the stock appears fully priced.

Qantas Airways (QAN)

October group passenger numbers were up 6.7 per cent and revenue passenger kilometres (RPK) increased by 3.2 per cent, The Qantas share price has largely reflected the expected cyclical improvement in revenues, with a 40 per cent plus increase since July 2009. While QAN is trading on a trailing price/earnings ratio of 5.3 times for full year 2008, the recovery in air travel has been somewhat seasonal leading into Christmas. The stock appears fully priced.

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.

Other articles in this week’s newsletter

The Stockies Awards – Who You Chose As The Best In The Industry

18 Share Tips – 14 December

Gold ETF Conspiracy Theories

Keep Holiday Debt From Snowballing

Stock Of The Week

How to know if a share price has bottomed or topped

Takeover Target Internet Stock

Stocks & Stats to watch out for this week

Market data – NEW