Question 1: Any thoughts on Northern Star Resources (NST)? Is now a good time to buy?
Answer: All the brokers like Northern Star (NST). Six out of six major brokers on FNArena have “buy” recommendations, target prices from a low of $11.00 to a high of $12.75, consensus of $11.39 which is a massive 65% higher than the last ASX price of $6.92. Yet the ASX price keeps falling!
Firstly, the gold price is falling as the US dollar rises and US interest rates increase. Secondly, there are concerns about rising production costs. Thirdly, perhaps the proposed super pit may need a capital raising in order to complete.
A buy if you are bullish on the price of gold. Otherwise, you may need to be patient because the market is “down” on gold stocks. Interest rate and production cost headwinds.
Personally, I prefer to play gold through one of the ETFs rather than the gold miners. GOLD or QAU (the latter is currency hedged).
Question 2: What are your thoughts on the Ramsey (RHC) buyout? I can’t find much information at the moment.
Answer: I wrote about Ramsay Health Care a few weeks back, which you can find here. [1]
I recommended that shareholders sell half their shares on the ASX. At the time, I thought that the takeover bid was at best a ‘50/50’ proposition of succeeding. Ramsay’s shares were trading then at $78.41. Today, they closed at $69.51.
The market clearly thinks that KKR won’t go through at the original offer price (an effective $91.60), so if a formal bid does emerge, it will be on revised terms. There is no news on how the bid is proceeding (apart from leaks to the newspapers), and there’s been radio silence from RHC.
The downside for me (in the event of the bid collapsing) is about $65.00 (their pre-bid level), so now with the price at $69.51, I would probably hold on.
Question 3: The iron ore miners have been smashed over the last week with the iron ore price dropping due to recession fears etc. Do you think BHP, RIO and FMG are now in the buy zone or would you wait a little longer? Maybe averaging in is the way to go?
Answer: Yes, they have been smashed. Not helped by recession talk, the stronger USD (which impacts all commodity prices) and more Covid-19 lockdowns in China.
I guess this is “nibble” territory. Long term, I think they are good value because all the valuations factor in considerably lower iron ore prices. However, you can’t fight market sentiment. Maybe buy a little now, but keep some powder dry for another leg down.
Question 4: Have the super caps changed this year?
Answer: The superannuation caps are indexed to movements in AWOTE (average weekly ordinary times earnings), but only move in set increments. There are no increases this financial year.
So, the concessional contributions cap is $27,500 (concessional contributions are your employer’s 10.5%, salary sacrifice contributions and any amount you claim a tax deduction for). Non-concessional contributions, which are personal contributions from post-tax dollars, are capped at $110,000 in 22/23.
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.