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| Subject: your wrong stockhouse don't agree you get deleted---Bonkers | |
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Date Posted: 05:09:34 01/11/03 Sat Bearing up: the best bets What the experts tip January 02, 2003 After a horror year, when many companies promising spectacular growth were dumped by a cynical market, investors are likely to go back to fundamentals. • Geoff Oaten Financial consultant, Salomon Smith Barney Private Clients 2003 picks BHP Billiton (BHP) Westpac (WBC) Qantas (QAN) AMP Reset Preferred securities (AMKPA) Woodside Petroleum (WPL) STW Communications (SGN) Corporate Express (CXP) Tempo Services (TEM) BRL Hardy (BRL) Transfield Services (TSE) Oaten is looking for certainty in an uncertain world next year with global economic recovery not assured and the threat of war. He has chosen stocks that are cheap relative to earnings and/or produced stable, attractive yields. There are also some cyclicals in there in case global recovery takes off. In the near term, BHP should continue to derive increased revenue from higher oil prices and is well placed to ride a global economic recovery. WBC has the lowest forecast PE for 2003 of the major banks at 11.5 times and an attractive dividend yield of 5.6 per cent. QAN continues to prove that it is probably the best managed airline in the world and has well-hedged fuel costs. Investors seeking the safety and security of fixed income should consider AMKPA securities. They offer an effective yield of over 8 per cent and include an option on AMP shares. WPL will benefit as the oil price increases in anticipation of any Iraq conflict. The price is at a 20 per cent discount to the SSB valuation of $15.40. SGN has leverage to an economic recovery, as does CXP. TEM is riskier but has a low PE attractive 4.8 per cent dividend yield. Oversold wine producer BRL has excellent management while TSE should benefit from an expected boom in non-residential construction. • Geoff Wilson Director, Wilson Asset Management 2003 picks CPH Investments (CPH) Loftus Capital Partners (LCP) McGuigan Simeon Wines (MGW) OFM Investment Group (OFM) Hugall and Hoile (HUG) Roberts Limited (RBS) Reckon Limited (RKN) Ridley Corporation (RIC) Metcash Trading (MTT) Independent Practitioner Network (IPN) Wilson avoids large caps and looks for unloved stocks and any catalysts that are going to change their valuations, like new management or a restructure. He likes Kerry Packer's CPH because of its strong net asset backing per share, which is 40 per cent higher than the current share price. It also has a highly competent investment team lead by Ashok Jacob. LCP is led by Australia's No. 1 fund manager of the 1990s John Abernethy, and the shares are trading 20 per cent below their net asset backing. MGW is a low-cost producer that has grown profit of more than 25 per cent a year for the last decade and will extract significant benefits from the Simeon merger. Fund manager OFM is trading at a slight premium to net assets but has big opportunities for growth. HUG, a retailer of irrigation equipment is on an aggressive expansion path and trading on a forward PE of just four times. Real estate company RBS will benefit from the rationalisation of merchandising in Tasmania. RIC has been revitalised by strong management and the stock is cheap. Software maker RKN, under new management and moving to a more profitable subscription model, should drive strong profit growth over the next two years. MTT will extract the full benefits from the Franklins acquisition in the current year. Healthcare group IPN is undergoing a restructure and has the potential to earn 1.3 cents a share in 2003. • Jason McIntosh Executive director, Fat Prophets 2003 picks Lihir Gold (LHG) Emporer Mines (EMP) Placer Dome (PDG) Macarthur Coal (MCC) Great Southern Plantations (GTP) Nufarm (NUF) Caltex (CTX) Village Roadshow (VRL) Oil Search (OSH) Austar (AUN) Although the gold sector enjoyed solid gains in 2002, in the Fat Prophets' view the rally in the gold price has only just begun. Miners LHG, EMP and PDG are trading closer to major lows than highs (and hence are cheap compared with their earnings). The mines they operate have long lives and they offer good leverage to the gold price (this point is important because hedging is likely to be a problem for some companies). Value stocks MCC, GTP and NUF should continue to outperform growth stocks next year. All have been out of favour with the market (the latter because of the drought) and offer strong recovery potential. With the exception of VRL and oil refiner CTX, all pay healthy dividends and can provide a degree of protection in volatile markets. The Fat Prophets' two favourite high-risk stocks are OSH and regional pay-TV operator AUN. Both have been judged dogs by the market and this has seen both trading at historically low levels. The Fat Prophets think the downside risk for both stocks is relatively small compared to their upside potential. • Anton Tagliaferro Investment director, Investors Mutual 2003 picks Amcor (AMC) Telstra (TLS) Southcorp (SRP) Westpac (WBC) Publishing & Broadcasting Limited (PBL) Brambles (BIL) TAB Limited (TAB) Spotless (SPT) MIA Group (MIA) Collection House (CLH) Tagliaferro's selection is tilted towards quality industrial stocks with good yield. AMC is a defensive stock on a dividend yields of 4 per cent and should continue to reap the integration gains from recent acquisitions. TLS is generating record amounts of free cash flow and a share buyback remains a possibility. Wine producer SRP is on a fully franked yield of over 5 per cent and earnings will improve substantially. WBC remains attractive and has arguably the best quality loan book and balance sheet of the banks. PBL is refocused on generating maximum cash flow from its three main assets - Crown Casino, Channel 9 and ACP magazines - making value adding acquisitions. BIL is now the cheapest it has been for many years and the company's three core businesses remain very good for the patient investor. TAB (NSW) will generate significant amounts of free cash flow and should substantially increase dividends or implement more share buybacks. The services sector in which SPT operates continues to grow at 5-10 per cent a year thanks to the continued trend to outsourcing. MIA, Australia's largest radiology business, is arguably the cheapest healthcare stock on our market. A merger with Sonic Healthcare cannot be ruled out. CLH remains well placed to benefit from the continued ballooning in credit card debt as well as outsourcing of the collections function by banks. • Glenn Mumford State director NSW and Vic, ABN AMRO Morgans 2003 picks BHP Steel (BSL) Westfield Holdings (WSF) Leightons (LEI) Suncorp Metway (SUN) Boral (BLD) MIM Holdings (MIM) Ventracor (VCR) Australian Magnesium (ANM) Queensland Gas (QGC) National Telecoms Group (NTG) Mumford is more upbeat on the Australian economy and predicts a strong pick up in non-residential construction. As a result he favours companies like BSL and BLD. He also sees a return to favour by oversold growth stocks but acknowledges the risks to the local economy from the US and Europe and says there is "a little safety built in" to his list. He nominates WSF as the best of the "growth" stocks and says the company will be rewarded for not falling off double-digit growth. LEI has "exceptional leverage to a forecast four-year non-residential construction upturn with a lot of work already in hand". SUN is beginning to recognise the value of its powerful insurance franchise. Effective management of MIM's mining assets now sees it "firing on all cylinders" and it's cheap price makes it a prime takeover target this year. Animal trials of VCR's artificial heart have gone very well in 2002 and human trials will be the likely catalyst for a major re-rating. Investors will come to realise the untapped value in QGC following the recent AGL/Origin contract and will re-assess ANM's Queensland magnesium project, which has been treated with scepticism since it had to be financially rescued by state and federal governments. Lastly, telco NTG has been oversold. The company is debt-free, has $7.5 million in cash and is trading on a forward PE of just 2.5. -------------------------------------------------------------------------------- The Australian [ Next Thread | Previous Thread | Next Message | Previous Message ] |