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18 Share Tips - 18 September 2011

18 Share Tips - 18 September 2011

By Anthony Black 18.09.2011


James Cooper, Morningstar

BUY RECOMMENDATIONS

Platinum Asset Management (PTM)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO)

Performance in full year 2011 was poor. This was due to the company’s main portfolios having large exposures to defensive companies, a high level of short sales and very little hedging back to the Australian dollar. But it remains a highly regarded Australian manager of international equities. The battered share price means the dividend yield is strong - about 6.5 per cent fully franked. The share price was trading at $3.75 on September 15, 2011.

Carsales.com  (CRZ)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

This online company is a growth stock. Also, it’s yielding almost 5 per cent fully franked. We expect many car sellers will continue to pay a premium to access the largest pool of car buyers. The recent share price retreat offers a buying opportunity. The shares were trading at $4.63 on September 15, 2011.

HOLD RECOMMENDATIONS

Ansell Limited (ANN)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

Ansell is an industry leader in protective healthcare products. Despite escalating raw material costs and unfavourable currency moves, full-year 2011 net profit after tax rose 15 per cent. Emerging markets, representing 21 per cent of global sales, grew at 23 per cent.

GUD Holdings (GUD)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

GUD owns, manages and develops brands that include Sunbeam, Davey and Dexion. It remains a well-managed, mini-conglomerate. Weak discretionary spending will continue to pressure each business, but GUD is well placed to ride out the malaise. It offers a solid fully franked dividend yield of almost 9 per cent.

SELL RECOMMENDATIONS

Pacific Brands (PBG)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

Despite moving manufacturing offshore, this clothing company faces the challenges of higher cotton prices, increasing labour costs and lower demand for branded products in the everyday market segment. In our view, this means future earnings levels are highly uncertain.

Fairfax Media (FXJ)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

Global media organisations are balancing free content to retain audience numbers with additional content behind pay walls to underpin profitability. Significant short-term uncertainty remains as to how FXJ will evolve alongside changes in industry pricing.

 

Michael Heffernan, Austock

BUY RECOMMENDATIONS

Macquarie Airports (MAP)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

This majority owner of Sydney Airport continues to benefit from increasing air travel due to lower fares. A recent Productivity Commission report on airports posed no real concerns to its underlying business.  Its future looks bright, particularly if global economic activity improves. On September 14, it was offering an attractive dividend yield of 6.44 per cent.

InvoCare (IVC)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

This funeral and cemetery business has been a steady sharemarket performer since listing in 2003. Half year net profit after tax increased 120 per cent to $14.46 million in 2011. Its diversified offerings, covering pre-paid, discount and traditional funeral services, together with owning several cemeteries, offer investors unique exposure to a growing company.

HOLD RECOMMENDATIONS

Wesfarmers (WES)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

This industrial conglomerate has weathered economic difficulties particularly well. It also produced a solid annual result, which compared favourably with Woolworths.  It posted a net profit after tax of $1.922 billion for full-year 2011, an increase of 22.8 per cent. The company’s full-year dividend increased to $1.50. Its diverse businesses, including retail, chemicals, insurance and coal puts it in a sound position for the future.

National Australia Bank (NAB)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

Australian banks have been punished in response to recent debt turmoil impacting European and US financial sectors.  The selling appears overdone, leaving the banks to trade at most attractive sharemarket valuations. Expect the NAB to benefit from an expected tick up in the British economy.

SELL RECOMMENDATIONS

QBE Insurance (QBE)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

This one time sharemarket favourite has recently fallen on hard times mostly due to the high number of natural disasters in the past year. Also, its investment strategy, relying very much on fixed interest, has been adversely impacted by particularly low global interest rates.

BlueScope Steel (BSL)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

The Australian steel industry faces challenging times due to a strong Australian dollar, import competition and the difficulties associated from the Federal Government introducing a carbon tax. Even though the steel industry will be shielded from the tax to a significant degree, the future of this Australian sector seems uncertain.

 

Cameron Bell, Intersuisse

BUY RECOMMENDATIONS

BHP Billiton (BHP)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

The global miner is in a great spot right now and is reasonably cheap. The company generates a huge amount of free cash flow and will continue to do so under almost any scenario. In its recent result, net operating cash flow was up 78 per cent to $US30.1 billion for the year to June, 2011. Additionally, it’s in the right space as it focuses on China’s needs rather than the fragile western consumer.

Matrix Composites & Engineering (MCE)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

After reporting lower than expected results, this engineering products maker is now trading at bargain rates. Although the company needs to win some contracts, management expects 20 per cent revenue growth this year. The stock was trading on just 6.9 times our full-year 2012 earnings forecast on September 14, 2011. For a high growth stock, that’s real cheap.

HOLD RECOMMENDATIONS

Transurban (TCL)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

The toll road owner has been a consistently strong performer over several years. It has strong management and a high quality portfolio that includes Melbourne’s CityLink and several roads in Sydney. The stock offers investors a long term, secure and defensive income stream with a dividend yield above 5 per cent at September 14.

ANZ Bank (ANZ)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

Australian banks represent good value and ANZ is our preferred exposure.  Debt issues in Europe may put selling pressure on the banks, but we recommend investors see through this and invest for safety and income, which the banks offer. Trading at $19 levels on September 14, the ANZ was yielding almost 8 per cent.

SELL RECOMMENDATIONS

Goodman Fielder (GFF)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

The food maker reported a NPAT (net profit after tax) loss of $166.7 million, which included a non-cash impairment charge of $300 million for full-year 2011. Revenue and operating cash flow also declined. Although a strategic review has been ordered, it’s unclear where the turnaround will come from. Better opportunities exist elsewhere.

ConnectEast (CEU)

CHART 

Chart: Share price over the year to 16/09/2011 versus ASX200 (XJO) 

We believe it’s highly unlikely a higher bid for the owner of the EastLink toll road will emerge. CEU has a takeover offer on the table from its largest shareholder Horizon Roads at 55 cents a share, which an independent expert has deemed as fair value. We recommend investors either accept the offer or sell on market. The shares were trading at 51 cents on September 15.

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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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WHAT’S ON THIS WEEK

week 31 October 2014
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    • 30
    • IAG IAG annual general meeting | 2:19 AM
    • NAB NAB full year results | 4:23 AM
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    • FDC Federation Centres annual general meeting | 4:25 AM
    • FLT Flight Centre annual general meeting | 4:26 AM
    • PPT Perpetual annual general meeting | 5:13 AM
    • NCK Nick Scali annual general meeting | 5:18 AM
    • HIA HIA New home sales for September | 5:19 AM
    • AOFM AOFM to issue $500 million of Treasury notes, maturing on February 27, 2015 | 5:19 AM
    • FNP Freedom Foods annual general meeting | 5:19 AM
    • TOL Toll Group investor day | 5:35 AM
    • UGL UGL annual general meeting | 5:42 AM
    • ABS Australian Bureau of Statistics (ABS) international trade price indexes for September quarter | 6:05 AM
    • BTT BT Investment Management full year results | 6:06 AM
    • WES Wesfarmers first quarter sales results | 6:10 AM
    • 31
    • ANZ ANZ full year results | 5:20 AM
    • EGP Echo Entertainment annual general meeting | 5:21 AM
    • ABS ABS producer price indexes for September quarter | 5:22 AM
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Craig James, of CommSec points out that retail sales grew by 7.4 per cent during the past year, marking the best rolling 12-month period since January 2002

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