Question: Would you advise an investment in Transurban (TCL) over Telstra (TLS) for my SMSF?
Answer (By Paul Rickard): Legally, I can’t answer your question because I don’t know anything about your SMSF’s (or its members) financial situation, investment objectives or particular needs.
I can, however, say that I have a personal preference for Transurban over Telstra. I think the former has a very sound, dominant business position and the stock has annuity like characteristics. My concerns would be a possible equity issue to fund a purchase of a 50% share in WestConnex in Sydney or further market pressure on the back of higher bond yields. See also: https://switzersuperreport.com.au/transurban-powers-ahead/
Telstra looks cheap, but I am not convinced that the market is ready to re-rate. I think we need to wait until the current management team get some “runs on the board” in relation to their cost out strategy and their ability to respond to the challenges in the mobiles market.
From a distribution point of view, Transurban’s will be largely unfranked, while Telstra is fully franked.
Question: I have 3% of my portfolio in Ardent Leisure (AAD) and I am sitting on about $600 profit if I sell now. What are your thoughts on AAD?
Answer (By Paul Rickard): Sorry, I can’t get excited by Ardent Leisure. I am a disappointed long-term holder and won’t put more money into the company. I guess if I saw a profit I would be tempted to take it.
As for the major brokers, they see it as fairly valued (target $2.03 versus last price around $2.05), range is $1.75 to $2.35. According to FN Arena, there are two buy recommendations, three neutral and one sell.
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 regard to your circumstances.
