Toll Logistics (TOL) is on Paul Rickard’s radar at the moment. He says it is friendless after an 8.0% fall since the start of the year.
“At Friday’s close of $5.23, it’s starting to look like a value trade of a FY14 PE of 13, dividend yield of 5.4%,” he says.
“On the other-side of the spectrum, Xero (XRO) at $41.50 has a market capitalisation of almost $5.4 billion – 100 times current year sales! Wow!!.”
Maybe popularity isn’t everything.
Real estate revival
The residential property revival continues unabated, but when everybody is talking real estate, it’s easy to get carried away by the hubris and forget the basics.
Just like investing in the share market, when it comes to investing in property, there are a few basic ‘no nos’, according to property advisor and Switzer Super Report expert Margaret Lomas.
1. Don’t be convinced you know the area you live in.
“You do not know the area where you live. What you know about the area you live relates to your lifestyle and has nothing to do with investing,” Margaret says.
2. Don’t start with a price range and then look for an area.
“It doesn’t matter how much money you’ve got, you’ve got to first work out where you’re going to buy…and what your overall strategy is, and then you can work out if you can afford it.”
3. Always look at the macro economics of a state and then work down.
“I start with Australia and start to look at the macro economics within each state. And there’s a big process [to get to the] micro.
Queensland is Margaret’s pick of Australian states at the moment. She says it’s 26% more affordable than Melbourne and 46% cheaper than Sydney.
With the East Coast property boom rolling along, if history is any guide, then Queensland will follow suit. Charlie Aitken is also quite convinced of a pick up in Queensland.
“Brisbane to me is the very next area to go,” Margaret says.
But she is not looking at the inner ring. It’s the 10 to 15 kilometres from the CBD, and the South Western Suburbs out towards Ipswich that have the most potential, with Nundah a clear favourite.
In Nundah and surrounds, investors should look for median-priced property, as incomes there are fairly stable. In the South Western corridor, where incomes are rising, it’s best to look for property priced under the median, which will be dragged up as the suburbs become more affluent.
And never forget to buy investments for the people who live in the area. That means for Nundah, you should be looking at a three to four bedroom house for families. While yields are currently at around 4.5 to 5%, that should increase as the area picks up.
In Sydney, Margaret’s pick is still Penrith (but for a limited time as it has experienced quite a bit of growth). In Victoria it is Frankston, in Adelaide Seaford and in Perth, Armadale.
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.
