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Stock Upgrades & Buys

Stock Upgrades & Buys

By Staff Journalist 13.01.2012


 

The steel industry is hardly the hot sector to be in thanks to the carbon tax, a depressed construction market and a property slowdown. But brokers aren’t shunning the steel industry just yet.

Merrill Lynch has upgraded struggling steelmaker OneSteel to a high risk buy as asset sales worth around $100 million and job cuts make inroads in its stretched balance sheet. Two days before Christmas, OneSteel rallied on speculation that a South Korean steelmaker was keen on buying it. JPMorgan has an overweight position on OneSteel and UBS places a Buy.

Super Retail Group is another surprise entrant this week considering the dire state of the Australian retail industry. Citi has upgraded the stock to a buy, as the company reports rising sales amidst the gloom – the bulk of sales coming from its regional stores profiting from cash-up miners, as well as a surge in buyers for leisure and hobby goods. The company retails auto parts and accessories, boating, fishing and camping goods through its Super Cheap Auto, Rebel Sports and Amart All Sports stores.

Some may be surprised to see iron ore explorer Gindalbe Metals in the table this week, which has lost almost 60% of its value in the past 12 months. Clearly, some brokers think the share price rout might have come to an end, with UBS placing a buy and MorganStanley with an overweight on the explorer.
 

Price Target Increases & Upgrades

Amcom Telecommunications (AMM)

CHART 

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

 

Share Price: $0.85

Price target: $1.09 (RBS)

Broker Calls: Buy - RBS

P/E: 12.67

Market Cap:  $203 million

Amcom Telecommunciations (AMM) is one of the few stocks defying the downtrend, rising 24% year to date. Investors like stocks like Amcom because the company is not reliant on consumer spending, and aren’t buffeted by fears out of Europe or the US. Amcom is also benefiting from positive sentiment surrounding the telecommunications sector with stocks like market leader Telstra, up 16% this year.

Amcom owns and operates a fibre optic network providing internet and voice services to around 900 businesses and government. They also manage data centres and provide cloud computing services.

Morningstar recently upgraded Amcom to a buy, with a $1.15 price target. The stock’s currently trading at $0.85. RBS also has a buy on Amcom following its purchase of IT company L7 Solutions for $15 million. The acquisition should improve the company's ability to sell and manage cloud computing services. The broker thinks the deal is around 12% EPS accretive in FY13.

In September last year, MLC became a substantial shareholder in Amcom snapping up 13,247,496 shares, or 5.54%, of the company.

Buys

NRW Holdings (NWH)

CHART

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

 

Share Price: $2.71

Price target: $3.45 (MS)

Broker Calls: Buy - RBS

P/E: 11.49

Market Cap: $756 million

Civil construction and mining services company NWH Holdings is benefiting from the tailwind of strong resources demand. A strong order book and a healthy earnings outlook makes this stock a candidate for your watch list. Clearly, NWH is a stock for those with a positive outlook on commodities, believing that global growth will swing into action this year. A recurrence of the doom and gloom outlook  we experienced towards the end of last year, would place downward pressure on this stock.

NWH’s share price is up 13% year on year, and 31% for the past two years. The stock hit a high of $3.09 in April last year – but has exhibited much volatility, and indirection, since. In October last year, the stock retreated to $2.20 as global volatility hit commodities prices.

The company issued a positive guidance in November, and the market gave the stock the thumbs up. UBS, Deutsche and Austock have buys on NWH. Deutsche expects earnings growth to be solid over coming years, and recently lifted its earnings estimates for the company by 25% and 18% in Y13. RBS Australia has a buy, estimating that earnings will rise 22% in FY12-13.
 

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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 5 September 2014
    • 01
    • RP Data RP Data Rismark Home Value Index for August | 1:01 AM
    • TD Securities TD Securities-Melbourne Institute inflation gauge for August | 6:08 AM
    • PMI Australian Industry Group performance of manufacturing (PMI) index for August | 6:10 AM
    • ABS Australian Bureau of Statistics (ABS) business indicators for June quarter | 6:11 AM
    • RBA Reserve Bank of Australia (RBA) index of commodity prices for August | 6:11 AM
    • 02
    • ABS ABS Building approvals for July | 2:17 AM
    • Dun and Bradstreet Dun and Bradstreet business expectations survey | 4:59 AM
    • ANZ ANZ-Roy Morgan weekly consumer confidence survey | 5:41 AM
    • ABS ABS Balance of Payments and International Investment Position for the June quarter | 6:08 AM
    • RBA Reserve Bank of Australia monthly board meeting and interest rate decision | 6:08 AM
    • ANZ ANZ chairman David Gonski to address an Australian British Chamber of Commerce lunch | 6:09 AM
    • ABS ABS government finance statistics for June quarter | 6:09 AM
    • 03
    • Employee Fraud and Theft seminar Employee Fraud and Theft seminar: Jeff Smith and Stuart Snaith from Regents Risk Advisory talking about how companies can prevent, investigate and recover losses from fraud | 2:18 AM
    • RBA RBA governor Glenn Stevens delivers keynote address at CEDA event | 2:18 AM
    • Paydirt Africa Down Under conference Paydirt Africa Down Under conference, day one of three | 2:19 AM
    • AOFM AOFM to issue $600 million of April 21, 2026 Treasury bonds | 2:23 AM
    • ABS ABS national accounts, including gross domestic product for June quarter | 4:58 AM
    • PSI Australian Industry Group Australian Performance of Services Index (PSI) for August | 5:41 AM
    • Kim Williams Book launch by former New Corp Australia CEO Kim Williams | 6:46 AM
    • 04
    • ABS ABS overseas arrivals and departures for July | 5:35 AM
    • ABS ABS retail trade for July | 5:40 AM
    • AOFM AOFM to issue $500 million of Treasury notes, maturing on January 23, 2015 | 5:42 AM
    • ABS ABS international trade in goods and services for July | 5:42 AM
    • Paydirt Africa Down Under conference Paydirt Africa Down Under conference, day two of three | 6:05 AM
    • CEDA CEDA Economic Prosperity event, speakers include Flinders University vice chancellor Michael Barber and UK Parliamentary Office of Science and Technology director Chris Tyler | 6:05 AM
    • 05
    • PCI Australian Industry Group/Housing Industry Association performance of construction index (PCI) for August | 6:06 AM
    • Paydirt Africa Down Under conference Paydirt Africa Down Under conference, day three of three | 6:07 AM
    • AOFM AOFM to issue $1.5 billion of October 21, 2019 Treasury bonds | 6:10 AM

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Featured Comment

I rate Royal Wolf on a few fronts. As mentioned, it has consistently grown earnings in challenging markets, unlike some companies that only grow strongly when there are favourable market conditions. Royal Wolf is clearly well managed.

Small-cap stock that performs in good and bad markets

Broker buys

  • ASX Code
  • Company
  • Broker
  • IREIressWilson HTM
  • RIORio TintoWilson HTM
  • CCPCredit CorpPhilip Capital
  • COECooper EnergyPhilip Capital
  • TLSTelstraMorgans CIMB
  • NABNAB LtdMorgans CIMB

Broker sells

  • ASX Code
  • Company
  • Broker
  • CGFChallengerWilson HTM
  • DLXDuluxWilson HTM
  • SMXSMS TechPhilip Capital
  • OKNOaktonPhilip Capital
  • SAISAI GlobalMorgans CIMB
  • EGPEchoMorgans CIMB

Central Banks Rates

  • RBA2.50%
  • FED0.25%
  • BOE0.50%
  • BOC1.00%
  • RBNZ3.25%
  • ECB0.15%
  • SNB0.00%
  • BOJ0.10%

Upcoming dividends

  • ASX Code
  • Company, Div., Franking
  • Ex-Div.
  • IBCIronbark Capital Ltd, 2c, 100%15/12/14
  • CYACentury Aus Inv Ltd, 2c, 100%10/09/14
  • MHIMerchant House Intl Ltd, 0.5c, 0%20/08/14
  • WICWestoz Inv Co Ltd, 4.5c, 100%07/08/14
  • OZGOzgrowth Limited , 0.75c, 100%07/08/14
  • SGTSingapore Telecom Ltd, 8.6c, 0%01/08/14
  • CUPCountplus Limited, 3c, 100%28/07/14

Eight brokers like these stocks

  • ASX Code
  • Company Name
  • Consensus Target
  • DOWDowner EDI Limited$5.78
  • FMGFortescue Metals Grp Ltd$6.89
  • ORAOrora Limited$1.51
  • RIORio Tinto Limited$81.22
  • CSLCSL Limited$73.30

Upcoming Floats

  • ASX Code
  • Company Name
  • Float Date
  • GVFGlobal Value Fund Ltd14/07/14
  • TPN3P Learning Ltd16/07/14
  • DXBDimerix Bioscience Ltd28/07/14
  • BALBellamys Aus Ltd30/07/14
  • ECO8Common Ltd22/08/14

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