Russell Research in the Media

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Stock Picks for Sunday Herald Sun – 19 January 2014

BUY

Austin Engineering (ANG) $3.60

Austin is building its mining truck and equipment sales fast in South America with major long-term contracts. High earnings growth on attractive price, yield and finances.

Tassal Group (TGR) $3.23

Australia's leader in salmon has learned much over a decade. Its honed, sustainable and sound strategy is set to continue double digit growth with rising yields.

HOLD

RCG Corporation (RCG) $0.80

The Athlete's Foot has run a little ahead in price at record levels, but Saucony will support double digit growth and five per cent franked yield; strong finances.

Retail Food Group (RFG) $4.51

Brand franchisor and coffee roaster, noted for Brumby's and Donut King. Strong growth, sound finances, near five per cent franked yield.

SELL

BlueScope Steel (BSL) $5.78

Hit by severe pain from the GFC, BSL made extensive restructuring. The results showed in 2013 but the share price now discounts future tough conditions.

SP AusNet (SPN) $1.25

Security holders have enjoyed 40 per cent price recovery over four years. Yields are around 6.7 per cent and regulated incomes look flat.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun – 12 January 2014

BUY

GBST Holdings (GBT) $2.90

Sales of GBT's securities and investment software are set to build in Asia and the US. Sound finances and record.

My Net Fone (MNF) $1.82

MNF claims the largest VoIP network in Australia. Its retail and network brands have expanded rapidly over a decade. Net cash, earnings growth and dividends.

HOLD

Commonwealth Bank (CBA) $77.60

Keep a useful part of your long term cash with a top quality bank - not on deposit, but in shares with higher yield, franking and growth.

Mortgage Choice (MOC) $2.83

Another record year has left the leading mortgage broker well placed for continuing growth and diversification. Five per cent franked yield.

SELL

Caltex Australia (CTX) $19.43

Caltex's marketing focus and Kurnell closure is sound, but the scale advantages of the Asian-based refinery competitors limit its prospects.

Echo Entertainment Group (EGP) $2.52

This casino group must improve its business in Sydney before possible Crown competition in 2019, and faces major investment or competition in Queensland.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  16 December 2013

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

BUY

REA Group Limited (REA)

REA is Australia’s dominant online real estate website, handling listings from nine out of 10 agents. REA is building its brand across commercial property and overseas. News Corporation holds 65 per cent of issued shares. While now priced at some 36 times profits to June 2014, return on equity is around 49 per cent. Earnings per share growth above 20 per cent is expected to continue with deep market prospects.

TPG Telecom Limited (TPM)

With good infrastructure acquisitions in recent years amid first rate execution of a focused strategy, TPG now has one of the best fibre networks in Australia. Its latest coup in buying AAPT for $450 million adds to TPG’s very strong cash flow. AAPT brings 11,000 km of fibre, access to more than 1500 premises and coverage to almost 1 million businesses and most NBN connection points.

HOLD

Breville Group Limited (BRG)

Breville develops small kitchen appliances to sell in Australia, New Zealand, North America and the UK. Innovation and global brand management support a premium market position and steady revenue and profit growth. EBITDA has grown at 16.2 per cent compound over five years, with earnings per share at 18.3 per cent.

Envestra Limited (ENV)

ENV is Australia’s largest natural gas distributor. Its networks provide secure but mostly regulated revenue streams offering long term growth. APA Group holds 34 per cent of issued shares and operates the networks. Cheung Kong holds another 19 per cent. An unfranked yield of more than 6 per cent could slowly rise. APA is a possible suitor.

SELL

Leighton Holdings Limited (LEI)

Share prices and earnings in Australia’s dominant mining and construction contractor topped out in 2007. The group’s diversity, including Asian and other activities, aided an earnings peak and partial price recovery in 2009. But subsequent revenue growth has been offset by project problems, write-downs and deteriorating conditions. More is still being done on its debt and culture.

UGL Limited (UGL)

An engineer, UGL diversified across rail, transport, power, water, maintenance and facilities management. After acquiring DTZ in December 2011, UGL became a global real estate services group. UGL plans to demerge DTZ in 2015. Meanwhile, 2012 and 2013 brought tough conditions and downgrades. Much is to be done before 2015 – will you wait?

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Stock Picks for Sunday Herald Sun – 15 December 2013

BUY

nearmap Limited (NEA) $0.48

nearmap has developed an aerial mapping system of high detail and clarity, giving subscribers a new edge. We expect emerging profits and a share price fall is an opportunity.

Technology One (TNE) $2.35

This leading edge software provider to the public and private sectors across Australasia and the UK sees yet more momentum in its fees after a strong growth decade.

HOLD

REA Group (REA) $40.96

Its real estate website dominates online property marketing and will continue to build its essential role for agents and buyers. Keep on accumulating

Select Harvests (SHV) $4.60

Australia's largest almond grower has restructured and refocused. It has upgraded guidance on income now largely coming from its own plantations.

SELL

Qantas (QAN) $1.00

We would not recommend an airline to a retail investor, but Qantas in particular faces heavy competition and a range of worsening conditions.

UGL Limited (UGL) $6.34

This diverse engineering group plans to demerge its global real estate services business in 2015, but little attracts in a tough period meanwhile.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  25 November 2013

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

BUY

nearmap (NEA)

nearmap has developed a top quality aerial photo mapping system. Its internationally patented technology provides clients frequent, customised and detailed pictures quickly and economically over Australia’s most populated areas. Subscription revenue has built rapidly, and the company could show a useful profit this financial year. nearmap has cash for expansion – possibly to some US cities first.

Select Harvests (SHV)

Australia’s largest vertically integrated almond grower and processor is globally significant as Californian competition is now suffering from drought. An acquisition of mature orchards in South Australia adds to upgraded guidance for the current crop and its pricing. It generates almost 90 per cent of income from its own plantations.

HOLD

Slater & Gordon (SGH)

This leading Australian consumer law firm is now replicating its strategy in the UK. It already employs about 800 people in 11 locations across the UK and is pursuing further opportunities. Its systematic focus is a great strength and differentiator. Accumulate for long term double-digit growth.

Integrated Research (IRI)

IRI develops and distributes performance management and diagnostic systems for business-critical IT communications and payment infrastructures. It has more than 1000 global customers, including banks, card payment processors and telephone, utility and IT leaders. IRI’s suite supports multiple platforms, vendors and global partners. The payments market is growing, IRI is profitable, debt free and pays a 5 per cent yield.

SELL

Metcash (MTS)

The company’s IGA supermarket brand is increasingly pressured by a war between Woolworths and Coles. In the past eight years, its share price has trended down. The price has fallen $1 since May due to intensifying competition. The 28 cent franked dividend is a small benefit and may need reviewing if margins fall.

Transpacific Industries Group (TPI)

After four years of transformation, TPI’s shareholder Warburg Pincus sold its 33.9 per cent stake in a placement at $1.05. Recently, 11 of 42 underperforming businesses have been sold, a new CEO has been appointed and the New Zealand business is to be divested. Trading conditions remain tough. Future earnings are fully priced for this waste manager.

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Stock Picks for Sunday Herald Sun – 17 November 2013

BUY

Magellan Flagship Fund (MFF) $1.38

This ASX-listed investment company gives overseas exposure to the major stocks best set to outperform globally. Magellan's active management is top class.

TFS Corporation (TFC) $0.82

The value of sandalwood oil is rising and the only significant and quality plantations are TFC's, in Australia's North: We see large long-term growth and yield.

HOLD

Credit Corp Group (CCP) $9.25

Debt receivables manager CCP's strong finances and team, growing offshore, should continue a 4 per cent yield and build earnings.

IRESS Limited (IRE) $10.03

A leader in sharemarket and wealth management systems, particularly in Australia. A major acquisition in the UK extends its upside.

SELL

AMP Limited (AMP) $4.61

AMP's scale as a wealth manager may prove a burden in executing culture and systems changes. Nimbler prospects preferred.

Leighton Holdings (LEI) $16.89

This major and diverse engineering contractor has faced tough headwinds in recent years, not yet fully overcome. Move on.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  21 October 2013

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

BUY

IMF (Australia) (IMF)

Litigation financier IMF had a record value of unfinished cases at its June 2013 year-end. After 12 years it continues to build its case load, now also expanding in the USA. Likely completions this year far exceed previous years. Expect a record result and at least another 15 cent franked dividend in 2014.

Webjet (WEB)

Last financial year Webjet successfully acquired Asian competitor Zuji, launched Lots of Hotels in the Middle-East and upgraded IT systems. Costs of all this slowed profit growth and halved reported profits. But revenues, margins and net cash increased. This half-year will show expanded profit streams. Meanwhile the share price has slid from $5.30 to way below consensus targets.

HOLD

AP Eagers (APE)

This auto retailer has paid a dividend each year since listing 55 years ago. Focused on Queensland, NSW and SA, it represents all top twelve selling car brands, eight of the top nine selling luxury car brands and ten truck and bus brands. With a focus on growing earnings and dividends, expect over 5 per cent franked yield.

Logicamms (LCM)

These engineering consultants work with major oil, gas and mining groups to lift the performance and lower the costs of their assets and operations. Logicamms has grown revenues, profits, margins and dividends over five years to give a 29 percent total shareholder return. Add for a 5 percent franked dividend and near double digit earnings growth.

SELL

James Hardie Industries plc (JHX)

Over two years, shareholders in this global leader in fibre cement have seen its share price move from under $6 to, at last, a decade high of $11. But the price is now well ahead of consensus targets, especially given today's more sober view of global growth and particularly the US housing recovery.

Virgin Australia Holdings (VAH)

Virgin works hard to be a good airline, but with losses in alternate years its shareholders have seen no rise in share price since September 2008, and no dividend. The price is above consensus targets. Debt, capital commitments and competition add uncertainty. What investment objectives keep you there?

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Stock Picks for Sunday Herald Sun – 20 October 2013

BUY

Breville Group (BRG) $8.09

Consumer product innovations for Australian, US, Asian and now UK markets are set to continue the strong earnings and dividend growth.

Forge Group (FGE) $4.875

This project and construction engineer had another record year despite a resources slowdown. Undervalued, it continues to grow soundly.

HOLD

ALE Property Group (LEP) $2.65

Owning 87 leading pub properties operated by a Woolworths joint venture not only gives a 6 per cent and rising yield but long-term growth.

REA Group (REA) $40.80

If the share looks expensive, its real estate online growth story justifies it. Innovation, investment and overseas leverage is adding more.

SELL

Transfield Services (TSE) $1.248

The service engineer's severe restructuring this year has lifted the share from its June lows, easing a move to sounder investment prospects.

Virgin Australia Holdings (VAH) $0.42

Three year's losses in the last six, no dividend or share price rise from September 2008. Competition and capital needs: look elsewhere.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun – 22 September 2013

BUY

Logicamms Limited (LCM), $1.70

This consultancy to lift performance and lower costs for major oil and gas groups has shown strong results and yields. Expect double digit returns.

Integrated Research Limited (IRI), $0.90

Its niche IT products support large global users in the booming unified communications field. Expect both growth and sound dividends.

HOLD

IOOF Holdings Limited (IFL), $8.32

Sound performer and serial acquirer in wealth management services, set to take a strategic holding in Equity Trustees. Accumulate for growth and yield.

Envestra Limited (ENV), $1.12

The ACCC will not oppose a share merger with 33 per cent owned Envestra. In any case, Envestra offers a 6 per cent yield and steady growth.

SELL

Ansell Limited (ANN), $20.94

Ansell has momentum but at an all-time high the share is priced well over consensus and has a low unfranked yield.

David Jones Limited (DJS), $2.91

The share has enjoyed a good run up to the results due Wednesday. Despite its focus on margins, don't stay longer.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  9 September 2013

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

BUY

BigAir Group (BGL)

Small cap company BigAir owns and operates one of the largest fixed wireless broadband networks across our big cities and in some regional areas. Five years of record profits via acquisitions and organic growth have built scale and systems supporting general and specialist businesses, student and remote accommodation needs. It has cash, no debt and pays dividends. We expect rapid future growth.

Magellan Flagship Fund (MFF)

Provides retail investors with an opportunity to directly participate in the strong growth of offshore investment portfolios managed by Magellan Financial Group (MFG) - which we have previously recommended here. MFG management is experienced, dynamic, connected and focused. Funds under management have grown to $16 billion in a few years. Through MFF, you get a specialist and successful manager choosing the best international reward/risk investment plays

HOLD

Collection House (CLH)

Arguably Australia’s leading receivables manager, CLH has earned profits and paid dividends since 1999. It has grown in each of the past five years. Its main focus is buying and working off debt ledgers, with disciplined control of risk and costs. It’s forecast a 9 per cent-to-15 per cent rise in earnings to June 2014. We expect this to continue beyond 2014, with a franked yield above 4.5 per cent.

Super Retail Group (SUL)

Management’s strategy, ability and focus have built a seven-year record of growth for this high performer in the resilient auto, leisure and sports retail sectors. Yet there is more to come. Initiatives include more new stores (17 have opened since June), building the online channel, starting its own brands and increasing supply chain efficiencies. Expect 15 per cent annual growth with a 3.5 per cent yield.

SELL

Harvey Norman (HVN)

Profitable, pays dividends and the founder is a household name. What’s not to like about HVN? Well, trends have slipped in recent years. With little unique intellectual property, the franchise model doesn’t provide enough margin or control. Too much property is locked in and the offshore businesses are weak. It’s not broken, but you can do better elsewhere.

Qantas Airways (QAN)

We have said it for years – an airline isn’t the place for a retail investor. From 2000 to 2009, you received a 5.6 per cent franked yield, but nothing in the past four years. In the past decade, the share price has mostly gone down. Qantas International earns too little margin despite potential upside from new partner Emirates. Up against strong global competition and Virgin Australia here.

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Stock Picks for Sunday Herald Sun – 25 August 2013

BUY

BigAir Group (BGL) $0.71

The wireless and broadband specialist continued to grow well and new acquisitions will power the share ahead strongly through 2014. 

IMF (Australia) (IMF) $2.02

Litigation financier IMF had unfinished cases in the year just ended and built its forward workload. Expect a strong result and dividend in 2014. 

HOLD

Collection House (CLH) $1.76

The debt collector is growing strongly and reliably. Accumulate to enjoy continued share price growth with yield.

G8 Education (GEM) $2.70

The childcare group had an excellent half-year and we expect further acquisitions, rising margins and yields. Keep building your position. 

SELL

GWA Group (GWA) $2.90

The building supplies firm is working hard but faces weak markets. Move elsewhere at the current prices.

Treasury Wine Estates (TWE) $4.55

The global wine market is still tough and TWE has more to do to slowly improve its prospects. Better value elsewhere.

Peter Russell, Russell Research

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