Russell Research in the Media

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Stock Picks for The Bull.com.au -  12 March 2012

BUY

FlexiGroup Limited, FXL ($2.14)

A leading provider of vendor and retail point-of-sale finance and telecommunication services. After making it easy for customers to buy, FlexiGroup has built strong relationships with vendors, expanding from retail into services and now business-to-business. It has a strong focus on systems, efficient financing and innovation. The Paymate acquisition moves it into online payments.

NRW Holdings Limited, NWH ($3.79)

In the thick of the resource construction boom, this civil mining services company is leveraged to massive projects, including oil, gas and iron ore. While the share price has risen, so too has its order book, staffing, cash balances and profit margins. The half-year results show it's well on track.

HOLD

Decmil Group Limited, DCG ($2.74)

As another fast growing player in resource project construction, Decmil enjoyed a strong first half with a capital raising, a record order book and a maiden dividend. It acquired an accommodation village in Queensland, and will build recurring earnings streams and project related income. Accumulate.

Qube Logistics Holdings Limited, QUB ($1.62)

Qube provides a wide range of stevedoring and national logistics, with port and bulk handling facilities. The last half showed revenue and profit growth. Acquiring WA-based Giacci Holdings adds to its resource focus. Keep adding.

SELL

Harvey Norman Holdings Limited, HVN ($1.96)

Its iconic electrical and household stores have shown flat profits for years. The last half revealed weaker retail sales pressuring earnings. Substantial property holdings and the five cent dividend are a plus. But its online offering is late and we see scant early upside.

Ten Network Holdings Limited, TEN ($0.81)

Ten has been a leader in its target demographic. It's built multi channels and invested in airport advertising. Yet its advertising revenues have been flat in the past five years and are now sliding. After warning of a bad interim result, with no dividend and a weak outlook, why wait?

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun - 12 February 2012

BUY

Credit Corp Group Limited, CCP, $5.27

CCP enjoyed a strong first half and raised its profit guidance. With expansion, there is more to come.

Webjet Limited, WEB, $2.90

Australia’s leading online travel service is setting new ticketing and profit records and outstrips competition. 

HOLD

Magellan Financial Group, MFG, $1.58

A funds manager, sub-scale but growing well, with timely themes: emerging markets consumption growth and e-commerce. Add.

Telstra Corporation Limited, TLS $3.40

Don’t underestimate its long-term growth upside. Enjoy its over 8 per cent franked yield.

SELL

Ansell Limited, ANN, $14.45

It expects growth after a challenging half but yield is low and unfranked. Others preferred.

Macquarie Group Limited, MQG, $27.19

Global uncertainties have sliced business for Macquarie. After growing worldwide, it is now shrinking. Better prospects elsewhere.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  6 February 2012

BUY

Austin Engineering , ANG

This supplier of “shovels to miners” is in a sweet spot for strong long-term demand. It supplies dump truck bodies, excavator and loader buckets and other mining equipment. Fast growing operations span Australia, North America and Chile, with joint ventures in Brazil and the Middle East.

Industrea, IDL

Major Chinese coal miners are a significant contributor to this company’s strong sales of underground mining equipment. The equipment has top safety features and enhances productivity. Industrea is also doing well in Australia and increasingly overseas. Its cutting edge equipment, backed by contract mining services, provides strong upside.

HOLD

GUD Holdings, GUD

This Sunbeam household appliances distributor reported lower interim sales and profits in tough conditions. But we expect a stronger second half. The company recently added Dexion products to its diversified range. GUD has a sound record – designing and marketing onshore and sourcing offshore. It offers a 9 per cent franked yield.

Navitas, NVT

One of few education stocks on the ASX, Navitas is leveraged to long-term demand growth. Interim results were flat, impacted by government policy changes in Australia and the UK. But these issues have been addressed here and will be in the UK. Operations in Canada and Singapore are growing well amid expansion in the US.

SELL

BlueScope Steel, BSL,

After a long decline, the price has stabilised, but prospects in the short-to-mid term remain weak. Transformation is well under way, with shareholder and government assistance, pain for the workforce and a Port Kembla furnace closure. At least shareholders can move on.

ResMed, RMD,

Sleep disorder breathing products should remain a long-term growth market, but global conditions aren’t as favourable now. ResMed has just reported another record result, but we expect a flat period ahead. The share price recovery from the three-month gloom provides an opportunity to quit a low, unfranked dividend yield.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun - 15 January 2012

BUY

UXC Limited, UXC, $0.395

It is now entirely IT focussed with no net debt. We expect yield to move to double digits.

IMF (Australia) Limited, MOC, $1.335

Australia's stand-out litigation financier with a strong and growing forward workload.

HOLD

Emeco Holdings Limited, EHL, $0.995

This major earth-moving equipment renter to coal, gold and other resource majors is well positioned for long-term growth. With five per cent yield; add to positions.

GUD Holdings Limited, GUD $7.39

Has a sound record and strategy as a leader in portable appliances and other brands, with offshore suppliers. Nine per cent yield with growth. Price attracts.

SELL

Goodman Fielder Limited, GFF, $0.425

Major supplier of branded baking, dairy and home food ingredients, but after a bad 2011 its response still faces tough conditions.

Resmed Inc, RMD, $2.52 This global maker of sleep-disordered breathing products continues to grow. But yield is low, unfranked.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au - 9 January 2012

BUY

Seek Limited, SEK

A leader in online job ads in Australia and New Zealand, with a market share of about 70 per cent. It also offers dynamic growth. Contributions from online education may surprise in 2012, while there’s major potential in its overseas online employment investments. It’s a major player across China, Mexico, Brazil and Asia.

Tox Free Solutions Limited, TOX

This waste management services group continues to grow, with an acquisition extending its Bowen Basin and Queensland operations. It has an agreement to buy the hazardous waste businesses of DoloMatrix for $58 million - already funded with a $27 million placement. Tox offers experienced management, high margins and barriers to entry.

HOLD

McMillan Shakespeare Limited, MMS

A leader in Australian salary packaging services and administration, including vehicle leasing. Credit and treasury operations are sound and provide flexibility. Growth prospects are well into double digits. We see a franked dividend yield above 5 per cent.

Forge Group Limited, FGE

Forge has a strong and experienced team. It has a solid track record in engineering, procurement, construction management and maintenance in Western Australia and West Africa. It has low debt, and a partnership with shareholder Clough provides flexibility to undertake larger contracts.

SELL

Treasury Wine Estates Limited, TWE,

Demerged from Foster’s in 2011, this global wine business faces considerable headwinds and competition in the UK and US markets. A strong Australian dollar is another challenge. Its partially franked dividend was below 4 per cent in December 2011. We expect it to underperform while restructuring its business. Returns are thin.

Perpetual Limited, PPT

This substantial wealth manager and services business faces a challenging investment environment. It’s too dependent on volatile institutional funds and markets. In our view, diversification didn’t work and costs are high. Despite a franked yield of more than 7 per cent, others are preferred.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun - 18 December 2011

BUY

Seek Limited, SEK, $6.14

Seek is well positioned to continue its rapid growth in online employment and education. Clear leader in Australia and NZ, it is first or second in China, Mexico, Brazil and across Asia.

Mortgage Choice Limited, MOC, $1.29

Australia's leading mortgage broker produces almost 10% franked yield. CBA held 8% of equity and has bought Count Financial, which held 17%. We expect a well-managed sell-down.

HOLD

McMillan Shakespeare Limited, MMS, $8.65

Leading salary packager and administrator including vehicle leasing and management, its growth prospects are sound. We see positive long-term upside and fair yield.

Forge Group Limited, FGE, $4.78

Forge has set a strong track record in engineering, procurement, construction management and maintenance. We expect more as projects proceed.

SELL

Treasury Wine Estates Limited, TWE, $3.71

Split from Foster's in May, this global wine business faces much competition in weak UK and US markets. Asset-heavy and with thin returns, it will underperform.

Perpetual Limited, PPT, $19.94 Its wealth management and services business relies much on volatile institutional funds and markets. Diversifications did not work and costs are high. Others preferred.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun - 6 November 2011

BUY

SAI Global Limited, SAI, $4.64

A rock-solid leader in global standards compliance services. SAI should continue its outstanding earnings growth at 15-20 percent annually, by acquisition and integration. Yield 3.5 percent rising.

RCR Tomlinson Limited, RCR, $1.63

This WA-based integrated engineering group is moving up to larger resource contracts, such as with Fortescue. We expect good double digit growth on a single digit P/E with a 3 percent yield.

HOLD

Adelaide Brighton Limited, ABC, $2.82

Leading supplier of cement and lime, ABC saw sound growth through the GFC. Earnings will be close to last year's record and we expect a just over 6 percent franked yield, to grow in future.

UGL Limited, UGL, $12.65

Well placed across infrastructure, rail, resources and services, UGL has a record of strong and disciplined growth, flagging 5 percent this year. We expect almost 6 percent franked yield.

SELL

Qantas Airways Limited, QAN, $1.59

Should a small investor hold an airline? Qantas has significant changes and challenges ahead. This year's dividend is uncertain. Others preferred.

James Hardie Industries SE, JHX, $5.75

Well placed but why wait for a low unfranked yield and a delayed US housing recovery? Asbestos overhang remains. Better value elsewhere.

Peter Russell, Russell Research Pty Ltd

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Stock Picks for TheBull.com.au, 3 October 2011

BUY

Campbell Brothers Limited, CPB

A global leader in analytical services for the mining sector, also for environmental, coal, industrial and other areas. In the year to March, revenue rose $34% to $1.1 billion, with EPS up 57%. Debt is low and the flow of complementary acquisitions will continue the exemplary track record of growth, even if it fails to match the last decade's 32 percent per annum.

Ludowici Limited, LDW

This long established mining equipment and consumables supplier with international operations has over several years been trimmed and focused and is now much invigorated. With several acquisitions integrated and adding scale to its consumable products output it is well placed and funded for further growth. We expect the P/E of eight times to fall and the franked dividend yield to rise beyond six percent.

HOLD

Imdex Limited, IMD

A global supplier of drilling mud and chemicals and down hole survey instrumentation for borehole core orientation. It makes and sells or rents its in-house developed products through its international service operations. It is well exposed to the volume of mining production and exploration and has small competitors. Debt is low. Revenues and profits were a record last year and are set to grow with recent acquisitions and initiatives.

Mortgage Choice Limited, MOC

Australia's largest independent mortgage broker continues to perform well in a restrained market - banks want mortgages! Fees were squeezed a couple of years ago but a high quality broker is a valuable adjunct to branch staff. Mortgage Choice built its book 6 percent last year and franchise numbers rose 5.4 percent. Profits and dividends rose, with added help from new product initiatives. Sustained franked yields over 10% attract.

SELL

Spotless Group Limited, SPT

Spotless supplies services globally to garment retailing and has strongly expanded its facilities and event services over the last few years in Australia and New Zealand, for the London Olympic Games and other overseas contracts. But despite the tighter focus of new management, with 33,000 employees this services group remains in a very tough field. We see better prospects elsewhere.

News Corporation Limited, NWS

News has annual revenues of US$33 billion. Its diversified media activities cover cable and satellite broadcasting, films, TV and publishing. So far it has not had great success in moving into new media or the major new economies, despite its perpetual motion in the news. For the Australian investor, pickings have been slight with very low dividends. Move on while a $5 billion share buy-back helps the price.

Peter Russell, Russell Research Pty Ltd

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Stock Picks for Sunday Herald Sun - 25 September 2011

BUY

Campbell Brothers Limited, CPB, $40.63

A global leader in analytical services for mining and many other sectors. We expect the exemplary track record of growth to continue, even if not at the decade's 32% per annum.

IOOF Holdings Limited, IFL, $5.43

The largest independent full service wealth manager after AMP is well placed to continue its strong, acquisitive and efficient growth and high dividend yield. Cheap!

HOLD

Data #3 Limited, DTL, $11.48

The rock-solid performer in ICT services, Data3 is a top partner of leading global solution providers. Accumulate at current prices after seven record years.

Mortgage Choice Limited, MOC, $1.18

The largest independent mortgage broker continues to perform well in a restrained market - banks want mortgages! Franked yields over 10% attract.

SELL

Spotless Group Limited, SPT

Despite changed management and a more domestic focus, this global retail and facilities services group remains in a very tough field. A serial underperformer, move on.

Transpacific Industries Group Limited, TPI, $0.70

Acquisitions in waste management, recycling and industrial cleaning led to a leading position but weighty debt. May at last improve but other prospects excel.

Peter Russell, Russell Research Pty Ltd

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Some Russell Research Meetings with Companies

23.11.11 IFL AGM

22.11.11 AZG AGM

21.11.11 SEK AGM

21.11.11 LEP Review of Annual Results

11.11.11 NMS Review of Annual Results

20.10.11 ABV Review of Annual Results

19.10.11 LGD AGM

6.10.11 AZG Review of Annual Results

19.9.11 RQL Review of Annual Results

5.9.11 DTL Review of Annual Results

30.8.11 LGD Annual Results

24.8.11 MCE Annual Results

15.8.11 OKN Annual Results

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