Shortlisted – Crown, Primary and Veda

Editorial director of Switzer
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On our radar today is Crown Resorts. Charlie made a big call last week and Paul Rickard agrees.

“I am with Charlie and think Crown (CWN) looks good value at around $15.82,” he says.

“Expect the Packer ‘PR’ machine to start rolling shortly – they will want to put last week’s indiscretion well and truly behind them.”

That might be hard to do, but shouldn’t distract from the fact that the company is a good investment proposition at these prices.

The Budget is causing plenty of concern but when it comes to stocks, it’s the health sector that is drawing most of the attention following the Abbott government’s proposals for a co-payment. This could be good for some stocks like Primary Health (PRY) although it has suffered in the lead up to tomorrow night’s Budget.

Primary Health (PRY)

“While in the long term the co-payment may dampen demand for GP and pathology services, in the short term it could actually be a boost to revenue if they get to collect and keep the co-payment,” Paul says.

Speaking on Switzer TV last week, Prime Value portfolio manager ST Wong also said listed health insurers, like NIB Holdings and potentially Medibank once it has listed, could be well positioned to take advantage of the co-payment.

“The stock [NIB Holdings] has always been quite fully priced. I think the potential is where I would be focusing on,” Wong said

“I think the potential for earnings growth is quite reasonable.”

“What could play out with potential budget changes going forward is really further rationalisation in the sector. I think that will play to larger players such as Medibank and NIB.”

Also on Wong’s watch list is Veda, which listed last year, and Qube. He likes Veda because of its strong track record and massive market share, both which present huge barriers to entry and make it quite attractive, despite the fact that it is also quite expensive.

“Revenue growth is going to be quite robust going forward so I am quite wiling to pay for a company like Veda,” he says.

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.

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