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18 Share Tips - 7 May 2012

18 Share Tips - 7 May 2012

18 Share Tips to BUY, SELL & HOLD from Australia's leading brokers

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By Anthony Black 07.05.2012

James Samson, Lincoln Indicators

BUY RECOMMENDATIONS

M2 Telecommunications Group (MTU)

CHART

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

After announcing in April it would buy Primus Telecom Group, M2, a telecommunications reseller, has been sold off. Investors reacted to increasing debt levels and additional shares on issue. But given the company’s track record of integrating acquisitions, the shares appear to offer potential upside. The stock closed at $3.07 on May 2.

Mastermyne Group (MYE)

CHART

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

Provides underground coal mining services, with an established client base in Queensland’s Bowen Basin and the   Illawarra region of New South Wales.  The company has experienced significant growth in the past 12 months. With a strong project pipeline and market leading position in Queensland, the outlook appears bright.

HOLD RECOMMENDATIONS

Imdex (IMD)

CHART

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

Third quarter performance and its full year profit outlook marginally disappointed the market. But this drilling fluid and consumables manufacturer remains exposed to solid exploration growth in Australia. However, at current levels, IMD appears fully priced. The shares closed at $2.59 on May 2.

McMillan Shakespeare (MMS)

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

Provides outsourced salary packaging services to Australian businesses. It’s also involved in vehicle leasing administration to employers in Australia and New Zealand. After a strong and consistent share price rise in the past year, MMS is approaching levels that reflect full value. On May 2, the shares closed at $10.87.

SELL RECOMMENDATIONS

Harvey Norman Holdings (HVN)

CHART

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

As a retailer, HVN is exposed to the slower side of the Australian economy. Demand for consumer electronics across the retail sector remains weak. Shoppers lack the confidence to spend on big-ticket items. There’s no short-term relief in sight for bricks and mortar retailers. Better investment alternatives elsewhere in the market.

Bradken (BKN)

CHART

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

Bradken makes mining products and other related consumables. Despite exposure to a growth segment, recent cash flow weakness (first half year report) and problems with its rail division led to a downgrade in full year profit guidance for 2012. With expectations remaining high, risks to the downside are also high.

 

James Cooper, Morningstar

BUY RECOMMENDATIONS

Kingsgate Consolidated (KCN)

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

Owns the Chatree gold mine in Thailand. A sharp increase in capacity amid Chatree North’s higher grades should drive a considerable jump in full-year 2013 profit.  But investors need to factor in sovereign and currency risks and perhaps a weaker gold price.  

Incitec Pivot (IPL)

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

We expect earnings per share for this fertiliser and explosives company to decline moderately in full year 2012.  
But EPS in full year 2013 should grow strongly as production at Moranbah in Queensland ramps up. This ramp up will help offset any reduction in fertiliser input prices amid production increasing at the Ma’aden plant in Saudi Arabia.

HOLD RECOMMENDATIONS

Acrux (ACR)

CHART

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

Acrux is a pharmaceutical products developer for global markets and is a pooled development fund.  The US Patent Office is yet to make a decision regarding a new application that would provide Axiron, a treatment for testosterone deficiency in men, an additional nine years of market exclusivity from 2017. Granting the patent would increase our valuation to $5.75, while a rejection would lower it to $3.50. The stock closed at $4.05 on May 2.

Alesco Corporation (ALS)

CHART

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

Australian listed paint business DuluxGroup acquired a 19.96 per cent interest in ALS at $2 a share. Dulux intends to make an all cash offer at $2 a share for the remainder of the company. While the 41.3 per cent premium to the pre-offer share price looks generous, we consider it reasonable.

SELL RECOMMENDATIONS

Treasury Wine Estates (TWE)

CHART

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

TWE is expanding premium and luxury product ranges in response to consumers trading up. While the portfolio continues a gradual shift to luxury products, commercial wines remain crucial, accounting for between 70 per cent-to-80 per cent of volumes and between 30 per cent-to-40 per cent of earnings before interest and tax. A positive outlook, but the price has moved ahead of valuation.

Domino’s Pizza Enterprises (DMP)

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

The company continues to drive growth through product innovation, quality ingredients, investment in online platforms and cross-selling of additional food products. But earnings potential is more than captured in the share price.

 

Paul Clarke, State One Stockbroking

BUY RECOMMENDATIONS

Crown Limited (CWN)

CHART

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

Operates the Melbourne and Perth casinos with gaming investment interests in Hong Kong and the US. The Hong Kong operation is showing significant signs of financial improvement. CWN has ample cash flow and a prudently managed balance sheet. This opens the door to possible corporate activity.

Incitec Pivot (IPL)

CHART

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

This fertilisers and explosives company offers significant exposure to the agribusiness and resource sectors. Its explosives business is also strong in Asia and the US. We expect cost savings in the explosives business to lift margins and company profitability in the short to medium term. IPL pays robust dividends in peak cycles.

HOLD RECOMMENDATIONS

Boral (BLD)

CHART

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

A building products group servicing Australia, the US and Asia. Markets can be challenging due to cyclical demand, but BLD enjoys strong positions across its operating businesses. BLD is well positioned to benefit from a recovery in the building industry. The stock remains an attractive investment amid further Asian expansion.

Santos (STO)

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

A major Australian oil and gas producer, with interests in Papua New Guinea, the US, Indonesia and Africa. Stronger energy prices have supported earnings, while investing in coal seam gas projects boosts reserves. STO is well positioned given increasing demand for energy, particularly gas, and future Asian growth.

SELL RECOMMENDATIONS

Harvey Norman Holdings (HVN)

CHART

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

Traditional retailers are suffering from online shopping. Interest rate cuts take time to filter through the economy, and households may well save the extra disposable income, build redraw mortgage facilities, or spend it online. Price deflation had an adverse impact on the HVN business, and the trend doesn’t look like reversing in the near future. 

Sedgman (SDM)

CHART

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

SDM provides mineral processing solutions to the global resources industry. The company is highly dependent on the performance of the coal industry. Any slowdown in demand for commodities could significantly impact margins. We prefer other stocks at this point of the cycle.



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