Analysts are divided over BHP. In his article today [1], Paul Rickard outlines how he is playing the stock.
Michael McCarthy of CMC Markets finds BHP Billiton (BHP) a compelling opportunity at $20 a share.
“The world’s largest mining stock is not going broke, I see commodity prices near cycle lows, and happy to diversity further into materials at current prices,” McCarthy says.
However, Evan Lucas from IG Markets still does not like BHP and says it is looking more and more like a trap.
With the prices of iron ore, oil and copper falling 36%, 5% and 26% respectively, Lucas says earning expectations for BHP are plummeting by the day.
“There is a higher chance of BHP being in the tens rather than a high $20 market in the next few weeks and months.”
Listed investment companies have come under the radar for Paul Rickard, co-founder of the Switzer Super Report.
Rickard says Argo (ARG) and Australian Foundation (AFI) are trading at material premiums to their net tangible asset (NTA) – Argo is almost 10%.
In contrast Milton (MLT) is trading at par.
“Looking at broad-based investment companies Milton Corporation (MLT) is a clear standout,” Rickard says.
Although Seven West Media (SVM) has been sold off in the past 12 months and appears reasonably cheap on several valuation metrics, Elio D’Amato from Lincoln Indicators does not like the stock.
“We continue to expect earnings headwinds during the next few years. It faces stiff competition for audiences and from online players in a subdued domestic economy,” D’Amato says.
OzForex Group (OFX) is on D’Amato’s likes list.
The company recently reported a solid half-year result with underlying profit increasing 12% to $12.3 million. This was driven by increasing client numbers and volume growth in all regions.
D’Amato says the company is on track to meet is full-year guidance for underlying operating earnings of between $38.5 million and $40.5 million.
[2]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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