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18 Share Tips - 17 June 2013

18 Share Tips - 17 June 2013

By Anthony Black 17.06.2013


Peter Moran, Wilson HTM

BUY RECOMMENDATIONS

ANZ BANK (ANZ)

CHART

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

The Asian business is gaining momentum. Extracting cost efficiencies should result in ANZ delivering above peer growth over the next three years. We view the recent share price retreat as a buying opportunity. ANZ shares were trading at $26.86 on June 13.

OZ Minerals (OZL)

CHART

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

Oz Minerals has delayed its copper/gold Carrapateena project pending the completion of a pre-feasibility study and further metallurgical testing. We argue the decision is prudent capital management in the current environment, and evidence that the project won’t be developed at any cost. The strategy enables OZL to continue regional exploration at Carrapateena, which has the potential to be more value accretive with less company risk. Delaying Carrapateena also allows OZL to pursue other options, such as a share buyback or examine merger and acquisition activity. 

HOLD RECOMMENDATIONS

The Reject Shop (TRS)

CHART

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

An investment case is compelling due to its store roll-out program, margin expansion and favourable industry consolidation. Near term, however, there remains considerable execution risk in bringing on so many stores in a short time - 60 stores in calendar year 2013 versus 20 stores historically achieved.  We retain our hold recommendation. 

Breville Group (BRG)

CHART

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

Breville retains a positive outlook for earnings growth, driven by a widely recognised brand, substantial investment in product development and marketing and net cash on the balance sheet. In the context of low growth and earnings uncertainty elsewhere in the equity market, Breville holds significant appeal. However, the current share price is trading at a sizeable premium to the market and Breville’s historical multiples.

SELL RECOMMENDATIONS

GWA Group (GWA)

CHART

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

While residential conditions are improving in NSW and WA, conditions remain difficult in Victoria and south-east Queensland. Given GWA is heavily weighted in Victoria (29 per cent of revenue), any delay or cancellation of projects will be negative for earnings. This is due to the six-to-nine month lag between housing starts and earnings. There’s strong competition in the Dux and Gliderol businesses amid cost base escalation for the remaining bathroom and kitchen businesses. We believe structural and downside earnings risk remain for GWA until a meaningful housing recovery takes place.

Wotif.com (WTF)

CHART

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

New chief executive Scott Blume and the Wotif board are working on a strategy to return the company to a growth trajectory. These initiatives are likely to see top line growth resume in 2014. On a current price/earnings ratio of almost 18 times, the stock looks overpriced. The shares were trading at $4.95 on June 13.

 

Andrew Arvanitopoulos, Alpha Securities

BUY RECOMMENDATIONS

iiNet (IIN)

CHART

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

iiNet continues to signal ongoing dividends to shareholders as strong profits exceed expectations. We also expect iiNet to surpass last financial year’s revenue, so this telecommunications company appeals for its growth. It’s a strong competitor. The shares were trading at $5.71 on June 13.

ANZ Bank (ANZ)

CHART

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

Asset quality is strong and Asia is driving volume growth while margin pressures are abating. We upgraded earnings forecasts by 2 per cent for full year 2013 and 4 per cent for full years 2014 and 2015. Our forecasts reflect an improved outlook for bad debts, costs and a slightly better margin outcome in the outer years. We believe the stock price is attractive. It’s currently yielding about 5.7 per cent.

HOLD RECOMMENDATIONS

Brambles (BXB)                           

CHART

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

Brambles competitor iGPS has thrown in the towel, filing for bankruptcy protection and selling off assets. It’s expected the doors will remain open during the sale process. BXB may pick up key accounts, although we believe the earnings impact would be minimal. Good news for sentiment, though.

Lynas Corporation (LYC)                  

CHART

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

Production ramp-up is going to plan. The target is an annualised rate of 11,000 tonnes a year by the end of June. Also, while forecasting output to rise to 21,000 tonnes a year in the next phase, the ramp-up will be dependent on customer demand. Rare earths prices are down about 17 per cent since the start of the year.

SELL RECOMMENDATIONS

Fairfax Media (FXJ)

CHART

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

There’s promising developments on the digital front and the pay walls for metropolitan mastheads should be fully up and running by July. But advertising at this point, especially employment and homes, isn’t as firm as we had hoped.

Toll Holdings (TOL)

CHART

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

We see increasingly difficult trading conditions for this transport and logistics giant across most of the company’s businesses. We have lowered full year 2013 earnings by 4 per cent and in full year 2014 by 6 per cent based on expectations of a delay in underlying volumes. We continue to see better investment value elsewhere.

 

Les Szancer, blueribbonoptionsonline.com 

BUY RECOMMENDATIONS

Newcrest Mining (NCM)

CHART

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

The share price has been hammered in response to massive writedowns and a falling gold price. If you believe the gold price is doomed – as some analysts do – then you wouldn't buy NCM. However, if you’re like me and believe the gold price and the company will recover, then NCM is a cheap buy. The company is undergoing restructuring. Results may take time, but it’s still a big producer. The shares were trading at $11.52 on June 13.

Condor Blanco Mines (CDB)

CHART

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

Purely one for the punters with a strong appetite for risk. I like this company for its exploration potential in Chile. Drilling results may surprise on the upside. Examine the website as part of your research before investing. The company is highly speculative. The shares were trading at 2.4 cents on June 13.  

HOLD RECOMMENDATIONS

Westfield Retail Trust (WRT)

CHART

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

I am sure everyone’s been in a Westfield Shopping Centre. This trust has assets in Australia and New Zealand.

As a former Westfield tenant, I can confirm the trust endeavours to achieve maximum rental returns. The stock is trading around its average price of $3. It jumps and falls a little around this price. The yield is a nice 6 per cent. The shares finished at $2.98 on June 12.

Incitec Pivot (IPL)

CHART

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

This fertiliser and chemicals company operates around the world. There has been some upward movement, but the share price is only marginally ahead of where it was 12 months ago. The yield is just above 4 per cent. Worth holding.

SELL RECOMMENDATIONS

REA Group (REA)

CHART

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

REA is in the sexy digital media space and online advertising is certainly very popular. In my view, the share price seems very inflated and well above intrinsic value. I would take a profit, or, at the very least, a partial profit. The shares were trading at $28.38 on June 13.

Qantas (QAN)

CHART

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

While a number of airlines across the globe are no longer with us, Qantas prevails. Where would it be if there was no Jetstar? There’s better investments than airlines. In the past five years, the share price has fallen from around $4 to trade at $1.36 on June 13. What’s going to springboard for this stock?

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 29 August 2014
    • 25
    • UGL UGL full year results | 5:40 AM
    • NIB nib Holdings full year result | 5:40 AM
    • PFL Patties Foods full year results | 5:41 AM
    • WSA Western Areas full year results | 5:42 AM
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    • BSL BlueScope Steel full year results | 5:44 AM
    • 26
    • CEDA Woodside executive Rob Cole speaking at CEDA Lunch about improving gender equality in Western Australia | 2:18 AM
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    • AOFM AOFM to issue $200 million of November 21, 2018 indexed Treasury bonds | 2:19 AM
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    • ANZ ANZ-Roy Morgan weekly consumer confidence survey | 5:41 AM
    • SCG Scentre Group half year results and operational update | 5:43 AM
    • BLY Boart Longyear half year results | 5:43 AM
    • PBG Pacific Brands full year results | 5:43 AM
    • VRT Virtus Health full year results | 6:46 AM
    • 27
    • ABS Australian Bureau of Statistics construction work done for the June quarter | 2:23 AM
    • SWM Seven West Media full year results | 3:18 AM
    • WFD Westfield Corporation half year update | 4:56 AM
    • SVW Seven Group full year results | 4:56 AM
    • LLS Lend Lease full year results | 5:34 AM
    • WHC Whitehaven Coal full year results | 5:35 AM
    • PRT Prime Media full year results | 6:05 AM
    • FLT Flight Centre full year results | 6:05 AM
    • BLD Boral full year results | 6:05 AM
    • WOR WorleyParsons full year results | 6:06 AM
    • CHC Charter Hall Group full year results | 6:07 AM
    • AOFM AOFM to issue $600 million of April 21, 2029 Treasury bonds | 6:10 AM
    • VED Veda Group full year results | 6:10 AM
    • 28
    • AOFM AOFM to issue $500 million of Treasury notes, maturing on January 23, 2015 | 2:17 AM
    • QAN Qantas Airways full year results | 5:35 AM
    • RHC Ramsay Health Care full year results | 5:36 AM
    • NEC Nine Entertainment full year results | 5:36 AM
    • ABC Adelaide Brighton first half results | 5:37 AM
    • BBG Billabong International full year results | 5:37 AM
    • SFR Sandfire Resources full year results | 5:38 AM
    • AGO Atlas Iron full year results | 5:38 AM
    • NBL Noni B full year results | 5:38 AM
    • Tasmanian state budget Tasmanian state budget | 5:39 AM
    • HIA Housing Industry Association new home sales for July | 5:39 AM
    • AUB Austbrokers Holdings full year results | 5:39 AM
    • ABS ABS Private New Capital Expenditure and Expected Expenditure data for the June quarter | 6:11 AM
    • 29
    • RBA RBA to release financial aggregates for July | 1:01 AM
    • AOFM AOFM to issue $600 million of October 21, 2017 Treasury bonds | 2:17 AM
    • VAH Virgin Australia Holdings full year results | 6:08 AM
    • TSE Transfield Services full year results | 6:08 AM
    • HVN Harvey Norman results | 6:08 AM
    • HZN Horizon Oil full year results | 6:09 AM
    • WDR Western Desert Resources full year results | 6:09 AM
    • WOW Woolworths second half sales and full year profit result | 6:10 AM
    • GXL Greencross full year results | 6:11 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

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