Switzer Super Report expert and managing director of Bell Potter Wholesale, Charlie Aitken, has been talking about volatility as the new normal for the past few weeks now but more recently he has had his eye out for value opportunities.
Last week, he reinforced his recommendation on AMP and upgraded the listed fund managers from underweight to neutral and put Telstra back to buy. [1]
Now he’s looking at iron ore.
“I think spot iron ore has bottomed for the year and will now track seasonally higher,” he wrote in a client note this morning.
“I think the knife stuck in the floor at $75t and there will be a gentle recovery from here on seasonal restocking. I like the idea of buying out of favour iron ore equities right now, as I think Australian dollar iron ore prices will rise into year-end even faster than US dollar iron ore prices. If nothing else, I think there’s a short-term trade in iron ore equities, particularly with Beijing pumping more stimulus dollars into domestic banks,” he says.
Woodside Petroleum
Charlie has upgraded the energy sector from underweight to neutral and if he were to go “fundamentally overweight one” it would be the cheap Woodside Petroleum (WPL).
Woodside Petroleum (WPL)
Source: Yahoo!7 Finance, 20 October 2014
“Woodside has corrected in this period of weak oil prices, but now looks solid contrarian value to me, albeit the near-term growth outlook is flat. However, on a P/E of 11.9x this year and 12.4x next year, with dividend yields of above 6.5% fully franked in both years, you aren’t paying for any growth, you are paying for reliable utility-like earnings and dividend streams, which you will get,” he says.
It’s therefore not looking bad on a yield basis with a grossed up 2014 yield of 9.71%, according to Charlie, and a grossed up prospective 2015 yield of 9.28%.
Carsales.com.au
One of Peter’s favourites is Carsales.com.au (CRZ).
“This is a stock that a lot of my experts like and based on its price around August, there looks to be upside,” he says.
“The company has a lot of potential in attracting new car sellers and this is seen as a local opportunity.”
Carsales.com.au (CRZ)
Source: Yahoo!7 Finance, 20 October 2014
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Also in the Switzer Super Report:
- Peter Switzer: Are we out of the correction woods? [3]
- Paul Rickard: Who’s afraid of big bad hybrids? [4]
- James Dunn: Five companies to fly away on [5]
- Roger Montgomery: A key baby boomer exposure [6]
- Rudi Filapek-Vandyck: Buy, sell, hold – what the brokers say [7]
- Staff Reporter: The next hot property spots [8]