Russell Research in the Media

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Stock Picks for Sunday Herald Sun – 3 August 2014

BUY

BigAir Group (BGL) $0.95

A small telco with the largest fixed wireless broadband network across Australia's cities. Acquisitions are building earnings rapidly.

G8 Education (GEM) $4.92

This leading childcare group has set a strong track record of building profits with well priced acquisitions. Expect continuing profit and yield growth.

HOLD

Bentham IMF (IMF) $2.04

Despite this foremost litigation funder being at a high, keep adding as it leads this growth field and next year will give a high yield.

GUD Holdings (GUD) $7.38

A good turnaround story at this diversified auto and portable appliance maker has set up 2015 as a strong profit and yield year.

SELL

GWA Group (GWA) $2.86

This supplier of bathroom and kitchen, door and other equipment is a sound performer but is fully priced and facing divestments.

Toll Holdings (TOL) $5.35

Although top in logistics here and substantial in Asia, Toll is struggling in a slow world recovery to add 5 per cent a year to earnings.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun – 6 July 2014

BUY

iProperty Group (IPP) $3.18

Already a leader in online property across burgeoning Malaysian, Hong Kong and Indonesian markets, with maiden profit in 2013. A speculative but proven performer.

Mermaid Marine Australia (MRM) $2.04

A strong track record yet the price dropped due to lack of growth in the past year. The Java acquisition adds Asian capacity and depth to coming growth on the North West Shelf. Yield 6 per cent.

HOLD

Amalgamated Holdings (AHD) $9.50

A solid growth story in hotels, cinemas and leisure. Add and expect the franked yield to rise over 5 per cent this year.

AP Eagers (APE) $5.73

A major auto dealer group, listed over 50 years and continuing to grow. Franked yield at about 4.5 per cent. Accumulate.

SELL

Duet Group (DUE) $2.41

The price jumped as Spark Infrastructure took 14 per cent in May. But in its key yet highly regulated industry, Duet Group faces slow growth and restraints on yield.

Graincorp Limited (GNC) $8.33

While its processing activities are less volatile than grain harvests, capital costs, grain network restructure and rising competition will hold back its results.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  16 June 2014

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

Magellan Financial Group (MFG)

This dynamic funds manager focuses mostly on key growth themes and major global shares. It’s impressed and built up Australian, US and European-based clients. Funds under management of $24 billion continue to rise significantly.Earnings are set to grow 50 per cent in both fiscal years 2014 and 2015, leaving an undemanding price/earnings multiple.

TFS Corporation (TFC)

TFS developed, manages and partly owns the world’s largest sandalwood plantations. Sandalwood oil is used in perfumes and has valuable medicinal properties. Soundly financed, vertically integrated, profitable and dividend-paying, TFS is completing its first harvest. Its current and future plantation value should multiply its share price over the long term.

HOLD

Domino’s Pizza Enterprises (DMP)

After a seven-fold price rise in five years and impressive February results, the stock has consolidated. Domino’s high price/earnings ratio reflects its track record and prospects for 25 per cent earnings growth. Expect a 2 per cent dividend. The store roll out across Japan and Europe will be supported by sound finance and company efficiency.

Technology One (TNE)

A top performing specialist software provider to the public and private sectors. Research and development costs are steadying. Software suites have moved to the cloud, enabling mobile access for clients. The UK market offers solid potential. We back its experienced guidance for 15 per cent growth to continue.

SELL

Coca-Cola Amatil (CCL)

Massive competition in the grocery channel last year sliced margins and volumes. Finances remain strong and new managing director Alison Watkins has made a fast start in reviewing the strategic challenges, but restructuring will take some time to show results.

Goodman Fielder (GFF)

Suitors Wilmar International and First Pacific lifted the takeover offer from 65 cents to 70 cents a share. The GFF board supported the bid in the absence of a better offer. Don't expect one. To minimise any risks and delay, sell on market. The shares were trading at 67.5 cents on June 11.

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Stock Picks for Sunday Herald Sun – 8 June 2014

BUY

Amcom Telecommunications (AMM) $2.07

Amcom has a track record of soundly financed and successful expansion across data, IT and cloud services. Expect strong earnings and yield growth.

Carsales.Com (CRZ) $10.70

The dominant online auto and wider classifieds business in Australia, also replicating overseas, has much more growth ahead.

HOLD

InvoCare (IVC) $10.20

The share price of this funeral services leader in Australia, New Zealand and Singapore has quadrupled in a decade with sound yield.

Tox Free Solutions (TOX) $3.40

A leader in the high margin sectors of industrial waste recovery in Australia, Tox has a strong growth record. Accumulate.

SELL

Coca-Cola Amatil (CCL) $9.41

Market and competitive conditions have cut the share price. Despite the new CEO's fast start, restructuring will take some while to show results.

David Jones Limited (DJS) $3.85

Market prospects look tough for department store chains. DJs shareholders might exit with the $4.00 Scheme. An earlier on-market sale cuts any risks.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun – 11 May 2014

BUY

M2 Group (MTU) $5.80

This telco's forecasts should become reality at its June year-end. Its history of meeting its dynamic growth targets is not reflected in the share price.

Ramsay Health Care (RHC) $45.67

Fifty years ago Paul Ramsay launched his first hospital. Buy this top performer for 17 per cent EPS growth across Australia, France and UK, and at a favourable price.

HOLD

Corporate Travel Management (CTD) $5.80

Already strongly based in Australia, its US operations are expanding and its well performing Asian acquisition sets it up for high growth.

Slater & Gordon (SGH) $4.60

A leader in consumer law in Australia and now in UK where its acquisitions are integrating well with more to come. Accumulate.

SELL

Arrium (ARI) $1.105

The former OneSteel has built its iron ore mining but it remains small and high cost. Steel, recycling and mine consumables face weakness.

Metcash (MTS) $2.78

Battling two supermarket heavyweights, Woolworths and Coles, is tough. The share price has slid but upside is clearer elsewhere.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun – 13 April 2014

BUY

iiNet (IIN) $6.98

A top five telco with an excellent record of growth based on customer focus and well integrated acquisitions.

McMillan Shakespeare (MMS) $9.64

Labour's plan to cut FBT benefits and car maker closure plans hit sentiment toward McMillan's share price. But its prospects remain attractive and now cheap.

HOLD

Domino's Pizza Enterprises (DMP) $19.59

Its Japanese business got off to a flying start in the last half-year. More is to come and recent share price slide softens the high P/E.

Silver Chef (SIV) $5.14

Slower growth in its GoGetta division led to a profit downgrade in December. With its depth of leadership we see sound value at these lower share prices.

SELL

BT Investment Management (BTT) $6.62

A strong business, 73 per cent owned by Westpac. But its price has quadrupled in 20 months leaving others preferred.

CSR Limited (CSR) $3.65

Competition keeps CSR's returns low. It's share price has risen beyond slowly improving prospects.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  17 March 2014

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

BUY

FlexiGroup (FXL)

Flexi provides diverse vendor and customer financing via its 12,000 vendor and retail partners. Its track record of sound and profitable growth reflects product innovation and off-balance sheet debt funding. A 20 per cent half year profit rise sets up continuing high double digit revenue and earnings growth, with franked yields above 4 per cent.

M2 Group (MTU)

M2 provides a full suite of telco, power and gas services to businesses and consumers, and has delivered a 70 per cent per annum total return to shareholders over five years. Overall growth amid integrating the latest major acquisitions should deliver another earnings rise of between 30 per cent and 40 per cent. The yield is above 4 per cent.

HOLD

Iress (IRE)

Provides information and trading systems to financial firms in Australia, New Zealand, Canada and South Africa. A base in the UK has been significantly expanded and Asian operations are under development. With a solid franked yield, the UK prospects and improving equity markets, the stock offers upside.

McMillan Shakespeare (MMS)

McMillan is a leading provider of salary packaging and vehicle leasing. It’s a sound performer. The shares were slashed when the former Labor Government planned to cut fringe benefits tax on leases. The Coalition’s reversal has enabled McMillan to return to business as usual. Sentiment is cautious so we don’t expect any rapid changes, but prospects in the UK and Australia are attractive.

SELL

ASX Limited (ASX)

ASX is a sole clearer of securities and derivatives trades. Rising equity markets are building ASX’s listing, issuer and trading fees. But, in our view, the shares are fully priced and earnings growth is limited. Better opportunities exist elsewhere.

Cochlear (COH)

Cochlear is at the cutting edge, which isn’t easy. Delays in regulatory approval of new hearing implant products impacted half year results. Cochlear also faces tough US and Chinese competitors. A great product, but revenue and profit growth have stalled since 2009. The shares are fully priced and at levels seen between 2007 and 2009.

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Stock Picks for Sunday Herald Sun – 16 March 2014

BUY

FlexiGroup (FXL) $3.63

This financier of vendors and customers has sound market, financing and profit growth credentials. Its double digit earnings, set to continue, are underpriced.

TFS Corporation (TFC) $1.74

TFC has built a world scale Sandalwood plantation business creating unique and self-sustainable long-term value. Study it now and buy the dip in its price run.

HOLD

SAI Global (SAI) $4.13

Global information provider for organisations to manage and comply with risk and regulations. Its earnings faltered in 2012. Now on track, hold and add.

Super Retail Group (SUL) $11.39

Its Auto, Leisure and Sports stores are well known. Internal issues last half-year caused a weak result, but, now overcome, the share price is rising again.

SELL

ASX Limited (ASX) $36.10

A sound business, but with encroaching competition. Despite rising equity markets its earnings are expected to offer lower returns than other prospects.

ALS Limited (ALQ) $7.07

Global leader in industrial testing, but still heavily weighted to resource testing. Its price is sliding.

Peter Russell, Russell Research

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Stock Picks for Sunday Herald Sun – 16 February 2014

BUY

Magellan Financial Group (MFG) $12.15

Arguably our fastest growing international fund manager, its funds' ongoing attraction to investors makes its share cheap on a one-year view.

RCR Tomlinson (RCR) $2.95

This engineer made a key acquisition last year that halved its resource exposure while adding key strengths in infrastructure.

HOLD

Automotive Holdings Group (AHE) $3.65

Shares of this motor dealership have slid markedly from a peak a year ago. But it is a major and sound business.

Data #3 (DTL) $0.87

One of the best established IT procurement, installation and servicing sources for public and private sectors. Its price slide makes the shares very solid.

SELL

Cochlear Limited (COH) $55.47

Its results were disappointing, particularly the fall in market share. While it should improve in time, the price remains full.

Goodman Fielder (GFF) $0.61

The half year result does not change our view that cost and margin pressures will stay tough for this supermarket supplier. Move on.

Peter Russell, Russell Research

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Stock Picks for The Bull.com.au -  10 February 2014

18 Share Tips - By Anthony Black

Peter Russell, Russell Research

BUY

GBST Holdings (GBT)

GBST was started in 1983 and listed in 2005. Its securities trade processing and wealth management platforms are well established in Australia, New Zealand and the UK. Sales of its market leading software are also set to grow in Asia and the US. Expect 20 per cent earnings growth this year and next with franked yields rising more than 3 per cent.

My Net Fone (MNF)

Listed in 2006, MNF claims to be Australia’s leading provider of hosted voice and data telecommunications, with a range of VoIP retail and network brands. Recent acquisitions on attractive terms are on track, and organic growth is ahead of forecast. MNF has net cash and its earnings growth should remain above 20 per cent with rising franked dividends.

HOLD

Mortgage Choice (MOC)

Australia’s leading mortgage broker is enjoying strong conditions. It has a record loan book and a 4 per cent share of national mortgage flow. Commissions have recently increased, as have its franchisees and financial planning business. It expects good growth in cash profits and dividends, which yield above 5 per cent franked. Add to positions.

RCR Tomlinson (RCR)

For engineer RCR Tomlinson, 2013 was a fourth year of growth with record earnings. A $140 million acquisition brought respected brands O’Donnell Griffin and Haden, making infrastructure RCR’s largest group with resources halved to a third of revenue. Expect more than 20 per cent earnings growth, with a recent price/earnings ratio at 8.7 times and yield above 3 per cent. Add.

SELL

BlueScope Steel (BSL)

This steelmaker severely felt the GFC. Global overcapacity, far bigger competitors, high input costs and debt forced extensive restructuring. By focusing on its niche brands and sectors, industry rationalisation at home and joint venturing overseas, the share price (once $50) has recovered from $1.47 to trade at $5.49 on February 6. But we believe share price growth from here is limited and better growth opportunities exist elsewhere.

Treasury Wine Estates (TWE)

Foster’s 2011 demerger freed each of the beer and wine operations. TWE accentuated quality wines and cut costs. Positive news doubled the share price to May 2013, but disappointing news followed and the share price retreated. Despite some great brands, many are ordinary and face global competition.

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