Fortescue is certainly in the bad books of our Super Stock Selectors this week. It gets three mentions in the dislike column. The general view on the iron ore sector is not very good.
CMC Markets’ Ric Spooner does not like it and says, “While I acknowledge the possibility that asset sales might improve its position, the underlying dynamics of the iron ore market mean that any producers with higher costs and/or lower quality production than the three majors are vulnerable.”
Raymond Chan says it’s still his least-preferred play and Evan Lucas says he doesn’t want exposure to materials that are highly leveraged. He’s staying clear of Fortescue, Mount Gibson Iron, BC Iron and Arrium.
Morgans’ Raymond Chan likes AGL Energy. He says it’s usually a good performer in times of uncertainty, and it’s also a recent favourite of Switzer Super Report expert Paul Rickard.
Ric Spooner likes Virgin Australia.
“The benefits from the end to its Australian capacity war with Qantas will be reflected in improved earnings over coming years and these are not fully priced in current valuations,” he says. Lower oil prices should also help.
Julia Lee is a fan of Commonwealth Bank. She says it looks attractive with a yield of 5.5% (7.7% fully franked) and a dividend payment coming up in August.
And chartist Gary Stone says the share price of Aurizon Holdings has broken above the resistance zone between $5.25 and $5.35. “This is a clear breakout which is bullish sign.”
Our Super Stock Selectors is a survey of prominent analysts, brokers and fund managers. Each week we ask them to name a stock they like, and one they don’t like. We purposely ask for ‘likes’ and ‘dislikes’ instead of recommendations, so it provides an idea of what the market is looking at, rather than firm buys or sells.
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