Les Szancer, Kinetic Securities
Commonwealth Bank (CBA)
The bank posted a marginally lower but healthy $4.4 billion profit in challenging times. A pleasing factor was its retail arm contributing almost half the result, with a 10 per cent increase in profit to $2.1 billion.
The CBA has endured a lot of resistance around the $44/$45 level. If it can keep above that level, who knows, it may go back to lofty $60 levels.
The industrial conglomerate’s full-year profit of $1.535 billion represents a 44 per cent increase. Coles appears to be improving under new management. A stronger Coles, with an already strong Bunnings, should
boost bottom lines in future. Wesfarmers offers top management and an optimistic outlook. From a chart perspective, Wesfarmers looks very strong on all time frames.
Lihir Gold (LGL)
Lihir’s share price moves up and down with the gold price. Gold appears to be taking a breather so Lihir’s share price has fallen. If you hold it, stay
calm, even add to your portfolio. I expect gold to be bouncing around US$1500 an ounce in the next 12 months or so. A roller coaster of a ride, but worth it.
Oil Search (OSH)
Although the crude oil price is struggling a little, Oil Search’s share price
has held up very well. Expect to see oil above US$100 a barrel next year. If you hold Oil Search, and allowing for market fluctuations, this stock could really fly over the next 12 months.
BHP Billiton (BHP)
Yes, I know BHP Billiton is the largest mining company in the world. Yes, I know it has plenty of cash. However, it reported a 62 per cent downturn in profit. In anyone’s language, that’s a massive drop. Also, BHP pays a very average dividend, so you would only buy it for growth. I am aware of some stockpiling as the company awaits orders. I would be selling and waiting for a solid share price retreat before buying again.
Again, a very strong and well run company. But we are here to trade, and all companies, blue chip or not, present trading opportunities. I would watch the $27.30 level very closely. Earlier this year, $27.30 was good support. But in the past couple of months, it’s been a resistance level. Also, the daily chart has a bearish engulfing candle, which could see a downward movement.
Carey Smith, Alto Capital
Tabcorp Holdings (TAH)
Australia’s largest gaming company reported a $521 million profit for 2009 – better than expected. It also retained its high dividend payout level, with a 65c dividend for the full year. Despite challenging conditions continuing into 2010, we expect the group to report earnings per share of about 80c and fully-franked dividends around 60c With the share price trading below $7, downside is limited by the low price/earnings ratio of less than 9 times and a dividend yield of 8.5 per cent fully-franked.
APA Group (APA)
The industry leader in energy transport infrastructure, carrying more than 50 per cent of Australia’s natural gas through its 12,000km of pipelines located in all mainland states and territories. Gas is the fastest growing energy source in Australia. Revenue risk is minimised as more than 90 per cent of the group’s revenue comes from the regulatory system or long-term contracts.
Coca-Cola Amatil (CCL)
The beverage maker reported a 10 per cent profit rise for the six months to June 30, and flagged high single digit profit growth for the full year. The company benefited from lower interest rates, cheaper petrol prices, and government handouts. A weaker economy has very little impact on sales.
One of Australia’s leading providers of private health care. It has 43 private hospitals, Gribbles Pathology with 63 laboratories and 45 medical centres. Healthscope is attractive on forecast earnings growth above 10 per cent for the next two years and a fully-franked dividend yield of more than 4 per cent
JB Hi-Fi (JBH)
There’s no doubting the success of this company’s model, making it a dominant player in Australia’s home entertainment market. Profit was up an impressive 45 per cent in 2009 despite tough retail trading conditions. The share price has risen more than 150 per cent since November and is now trading on a price/earnings ratio of 20 times. Company chairman Patrick Elliott recently sold $875,000 of stock. We believe the stock has run too far too fast.
Medusa Mining (MML)
An Australian company that’s successfully developed a mining project in the Philippines. However, today’s market capitalisation of about $450 million appears to be over done. With current gold production between 15,000 and 16,000 ounces a quarter, it’s one of the most highly priced gold producers on the Australian Stock Exchange. Investors should take profits as the share price has run from around 50c in November 2008 to current levels of $2.50.
Peter Rudd, Balnave Capital
Australian Agricultural Company (AAC)
Operating 18 cattle stations, two feedlots and two farms in the Northern Territory and Queensland, the group’s latest half-year year loss was affected by opposite weather extremes - a one-in-90-year drought in the Barkly region and a one-in-30-year flood in the Gulf country. However, the rains have replenished feed reserves on all properties, and provide a sound base for pastoral activities for the balance of 2009 and into 2010.
Wotif.com Holdings (WTF)
Wotif.com sells online accommodation in 45 countries, including Australia, New Zealand, Thailand, Malaysia, Singapore, Canada and the UK. An increase in short-break leisure bookings – about 50 per cent of all customers – underpins a forecast profit rise of 20 per cent this year.
Crane Group (CRG)
Full-year profit for this plumbing/hardware supplier has suffered in response to a slowing global economy. Earnings for the current year should be static as the company awaits improving market conditions and government approvals for major infrastructure pipeline projects.
Sundance Resources (SDL)
Sundance is looking for strategic partners to jointly develop its 2.5 billion tonne iron ore resource in the west African state of Cameroon. The proposed US$3.3 billion project, which includes a 490km rail link to port, is forecast to produce 35 million tonnes of ore a year at an operating margin of US$44 a tonne.
Bendigo and Adelaide Bank (BEN)
The regional bank expects profit margins to improve in line with trading conditions in the next six-to-12 months. However, the bank has major exposure to the ill-fated forestry and rural management investment scheme group, Great Southern Limited. Also, it’s lost market share as a result of the Federal Government’s bank deposit guarantee for the majors.
We have previously recommended this grains marketer as a hold. But we suggest investors take some profits after a considerable share price rise in the past month or so.
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.
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