Skip to main content

Stock Picks yr 2008 / 2009

Picking the bottom of the market


We stress we are not trying to pick the bottom, that point may still lie ahead. But it does appear that the worst of the panic may be behind us and if history is any guide, we will experience a rally from these oversold levels at some point.

You may not be surprised to hear i still favour the resource sector. Positives include strong balance sheets (little to no debt) healthy cashflows and extremely attractive valuations.



has a strong balance sheet, solid cash flows, and if you believe commodity prices will not sink into the abyss, is an outstanding long term buy. More importantly, the valuation is compelling, indicating that investors have already factored in much of the bad news on the commodity price front. The estimated PE is less than 5, EV/EBITDA below 3 times and profitability, as measured by return on equity, is over 40%.

Asset quality and management strength are a feature and make BHP the standout amongst the diversified resources. Rio is also cheap but we favour BHP based on greater resource diversity (including energy exposure) and lower debt levels.

Macarthur Coal

produces high quality coking coal, which is used as a part of the steel making process. The company is not popular right now, and trades on a forecast PE of around 3.5 times. Given the higher earnings expectations this year (FY09) from higher contract coal prices, the forecast dividend yield is 14%. The market is basically pricing in a sharp reduction in contract coal prices, so no one believes the forecast numbers. However, strategic buyers paid $20 a share for this stock just a few months ago and while that was probably too high, we believe the market is currently being too pessimistic.

November (4)

Popular posts from this blog

Best Australian stock forums online ( finance forums)

Many traders and investors use forums to share ideas, learn from the more experienced, or simply to stave off boredom during long hours at the computer. Here we list the known universe of forums, complete with costs, member numbers, extra benefits and popular forum topics. Please post a message on Your 2 Cents if your favourite forum isn't listed here, or if you feel that there's more to add about the day-to-day goings on in your online community.Forum
Stock comps
Forum areas
AussieStockForums.comFreeASX by share code, General, Beginners, Derivatives, Commodities, International, Strategies/SystemsEasy to use, independent forum. Aussie Stock Forums has a group of very active and knowledgeable traders. Private messaging available. Australian forum.
Chimes in ExileFreeASX stocks, fundamental analysis, technical analysis, commodities, economics, investment tools The forum has a small group of regular contributors that form a genuine community of investor…

The diggers and dealers forum meet 2011

The diggers and dealers forum has just begun August 1. Its a three day annual event happening every year  at the WA country town of kalgoorlie.2011 Diggers & Dealers forumBig name brokers  keenly watching the event will be MacquarieDeutsche BankBell PotterGoldman SachsRBS MorgansEvans & PartnersHartleysBlack Swan Euroz.Well most other websites will give you the  finer details of the annual meet and greet that happens at kalgoorlie , so we will just stick with the bare minimum of details  and focus on the more enjoyable bits  of information that the dealers require to strike a good deal while in town.Bare detailsWebsite : Diggers & DealersEvents : Program and scheduleWatering holes and entertainment at Diggers and dealers forumPubs , clubs  and skimpy (barmaids) culture in kalgoorlie . There are about 25 pubs in Kalgoorlie-Boulder area and for a city that stretches just 67sq km the number of pubs makes for  a good choice on drinking holesand entertainmentExchange Hotel ( Pa…

Stock market and High frequency trading

High frequency and computerised trading androgue trading is again  in the news with  trader Mr Adoboli working for UBS  who was arrested at his desk, is alleged to have lost £1.3 billion through his rogue trades  according to the company , now also annoucing that they might go into a loss in this quarter. According to some reports in the media it was said that Mr Adoboli Himself had reported the  trade when the trade went bad before the computers picked up the loss.
Not so long ago in 2008 Jérôme Kerviel, the Paris-based Société Générale trader lost £4 billion in rogue trades, but fought it out in court contesting that the trading firm knew about his trades with large amounts.

High frequency computerised trading in Australia HFT drives the wild swings in global markets and in co-relation influences the local assets, the intensity is expected to rise with online exchange Chi-X to  begin operating in Australia soon with a limited number of stocks in November. The ASX will launch its Pur…