Question: I am a retired electrician running my own SMSF. I have the following shares at present: Acrux (ACR), Amcom Telecommunications (AMM), Australia & New Zealand Banking Group (ANZ), Aurizon (AZJ), Aristocrat Leisure (ALL), Origin Energy (ORG), Suncorp (SUN), Ten Network Holdings (TEN) and Woodside Petroleum (WPL). Are there any of these you would off load? I am looking to invest around another $250,000 to $350,000 into stocks before the end of the year. Can you give me which six stocks from Switzer’s growth and yield stocks you would recommend.
Answer (Paul Rickard): In regards to your portfolio, I can’t legally provide you with personal advice unless I am appraised of your financial situation, financial goals and particular needs. That said, there is nothing that really stands out as a “must offload” stock. I don’t like TEN much – although Lachlan Murdoch and company obviously see something in it and I guess you are backing their judgement. I just don’t like the industry much – and they are very much the third player in the market. I also don’t know a lot about Acrux – there are some quite divergent opinions about this stock.
For what it is worth, the current consensus broker ratings (+1.0 most positive, -1.0 most negative) and target prices (according to FN Arena) are:
ACR 0.0 $3.62
AMM 0.5 $2.13
ANZ 0.5 $31.22
AZJ 0.5 $4.89
ALL 0.1 $4.49
ORG 0.5 $14.51
SUN 0.4 $12.99
TEN -0.3 $0.28
WPL -0.1 $38.81
If you are looking to add some more money to the market, I think the starting point is to look at your sector weights and see what your biases are. Depending on what these are, I would be inclined to look at the major banks (CBA, Westpac), BHP and some of the leading industrial stocks (Toll Holdings, Brambles etc).
Question Part 2: Also I get a little confused when in the same newsletter Charlie Aitken says Qantas could double in the next couple of years and Rudi Filapek in What the brokers say has Qantas downgraded. Could you explain the background to these opposite recommendations?
Answer (Paul Rickard): We try hard to ensure that our subscribers aren’t confused, however sometimes there are going to be some contradictory opinions. We report what the major brokers do, and yes back on 2 September, a couple of the brokers downgraded Qantas. Independently, on 10 October, Charlie put a big call on Qantas – with a well-researched and strong argument.
I hasten to point out that in our experience, the broker analysts get it right about as often as they get it wrong. However, they can be influential – and a change of rating can often lead to a material change in price. Information we believe is worth having.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Also in the Switzer Super Report:
- Charlie Aitken: QBE – cheap at half the price [1]
- Paul Rickard: Road test – Centuria’s 8 Central Avenue fund [2]
- Ron Bewley: Best buys in the telco sector – Telstra and Singapore Telecom [3]
- Penny Pryor: Buy, Sell, Hold – what the brokers say [4]
- Sandy Morgan: My SMSF [5]
- Tony Negline: Contribution splitting – a little pain for a big gain [6]