Telstra features in our ‘likes’ today, with both Evan and Paul nominating it. Evan says that the slide in the share price looks to have bottomed.
“Last week Telstra bounced off a newly formed support level of $6.14,” Evan says.
“This I see as a very positive thing for the price action in the short term and see Telstra under Andy Penn entering a slightly more exciting phase of growth in the longer term.”
Paul felt it was cheap last week, and still thinks there is value up to around $6.40.
Julia Lee’s pick of Rio Tinto shows that there is some confidence building that the rebound of the iron ore price will be sustained.
“With iron ore rallying more than 20% from the lows in April, the iron ore miners will benefit from higher prices and margins,” she says.
And she also notes that China is on a strong liquidity and stimulus drive, which should help as well.
Still on Oil, and Gary Stone has picked Oil Search this week, saying it has been able to handle the weakness in the oil price much better than other oil stocks.
Showing his chartist credentials he says: “Technically Oil Search has formed a double bottom, just like the oil price, that coincides with the bottom of a long term range that trends up.”
Automotive Holdings Group is Elio’s favourite pick given it’s announcement that it will be further expanding its total number of dealerships across Australia and New Zealand.
“While growth in new vehicle sales is only expected to be moderate across the industry in FY15, AHE is well-positioned as the market leader and will benefit from recent acquisitions in both the automotive and refrigerated logistics segments,” he says.
It’s one for the dividend seekers as well, given a prospective grossed up dividend yield of more than 7.5%, according to Elio, and it also has a good track record of increasing its dividend.
After the wild weather in NSW, and the general expectation that insurance claims will rise, two insurance companies are in our dislike list this week.
Julia says that Suncorp is at a high risk of an earnings downgrade and is unlikely to reach its 10% return on equity target in FY15. Raymond Chan is also not very enamoured with Insurance Australia Group, which will be hit by the wild weather as well.
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