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Friday 31

October, 2014 2:08 AM

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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 31 October 2014
    • 27
    • ARG Argo Investments annual general meeting | 4:26 AM
    • BEN Bendigo and Adelaide Bank annual general meeting | 4:27 AM
    • SPO Spotless annual general meeting | 4:28 AM
    • RBA Panel participation by Reserve Bank of Australia (RBA) head of financial stability, Luci Ellis at the Australian Housing and Urban Research Institute panel roundtable | 6:07 AM
    • 28
    • AOFM AOFM to issue $200 million of February 21, 2022 indexed Treasury bonds | 4:05 AM
    • SGP Stockland annual general meeting | 4:26 AM
    • Financial Review's Future Forum Financial Review's Future Forum: The Asian Century, featuring Telstra chief financial officer Andrew Penn, Fortescue Metals chief executive Nev Power and former Australian Ambassador to China Geoff Raby | 4:27 AM
    • WPL WorleyParsons annual general meeting | 4:27 AM
    • WHC Whitehaven Coal annual general meeting | 4:28 AM
    • SGF Challenger annual general meeting | 4:29 AM
    • TAH Tabcorp annual general meeting | 4:29 AM
    • BGA Bega Cheese annual general meeting | 5:13 AM
    • ANZ ANZ-Roy Morgan weekly consumer confidence survey | 5:16 AM
    • DMP Domino's Pizza annual general meeting | 6:08 AM
    • 29
    • MMS McMillan Shakespeare Group annual general meeting | 2:18 AM
    • QRX QRxPharma annual general meeting | 2:18 AM
    • TTS Tatts annual general meeting | 4:06 AM
    • AOFM AOFM to issue $600 million of April 21, 2029 Treasury bonds | 4:59 AM
    • DXS Dexus Property Group annual general meeting | 5:40 AM
    • AGO Atlas Iron annual general meeting | 5:41 AM
    • JBH JB Hi-Fi annual general meeting | 5:42 AM
    • MOC Mortgage Choice annual general meeting | 6:05 AM
    • NIB nib Holdings annual general meeting | 6:08 AM
    • TPI Transpacific Industries annual general meeting | 6:09 AM
    • SUN Suncorp chief executive Patrick Snowball speaking at American Chamber of Commerce in Australia lunch | 6:09 AM
    • GXL Greencross annual general meeting | 6:46 AM
    • 30
    • IAG IAG annual general meeting | 2:19 AM
    • NAB NAB full year results | 4:23 AM
    • AAD Ardent Leisure annual general meeting | 4:24 AM
    • PAS PAS Group annual general meeting | 4:25 AM
    • 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
    • RBA RBA to release financial aggregates for September | 5:22 AM
    • NCM Newcrest Mining annual general meeting | 5:22 AM
    • HIL Hills annual general meeting | 5:23 AM
    • AOFM AOFM to issue $600 million of October 21, 2019 Treasury bonds | 5:23 AM
    • MQG Macquarie Group half year results | 6:09 AM
    • ORG Origin Energy quarterly production report | 6:09 AM

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Featured Comment

Coal sentiment plumbed new lows in October after China tariffs action.

Has this stock fallen too far and too fast?

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