This year among the brokers Fisher & Paykel seems to be the winner. Where were they in the early part of this decade when they were trading @ 1.80? Just wondering. The rest can be put in the same category. And keep this in mind:
Pick these stocks on dips in their share prices - they ALL have dips. AND - do your own research - lots of it. It makes things interesting as well. Next year could be another one like we have already had - some dips but mostly up - or it could - drop but be mostly down. Whatever it is it will provide opportunities for all of us to make money. Share Investor's 2017 Stock Picks
Blue chip and small cap stocks lead the list of expected market performers for the coming year
F&P Healthcare is expecting 17pc increase in growth in the coming year. Photo / Greg Bowker
Some undervalued "blue chip" companies and a selection of small cap stocks dominate our broker picks for the year ahead.
Fisher & Paykel Healthcare gets the tick from four firms -- Forsyth Barr; Hamilton Hindin Greene; First NZ Capital; JBWere -- making it the most popular choice in an unusually diverse field.
Despite being perennial favourite the stock underperformed in 2015, but there appears to be a strong view that it now represents good value.
"[F&P] has come back significantly from all time share price highs, having reached a mid-year high of $10.90," says Hamilton Hindin Greene's James Smalley.
"We believe this has been on the back of concerns regarding litigation with competitors and a potential negative impact on their sales into the US. We see some headwinds due to production facilities being based in Mexico, and the incoming Trump administration signalling an increase in protectionist policies."
But, he says, the sell-off is an opportunity, given the short-term nature of the issues, to buy in to a quality business.
Rickey Ward, of JBwere agrees.
"F&P Healthcare is a genuine growth company with a track of record delivering strong earnings improvement from offshore avenues.
"We do not see this changing, with earnings growth approaching 17 per cent this coming calendar year," he says.
"Potential taxation concerns around Mexican manufacturing following President-elect Trump's success have been exaggerated."
Another mature company, seen as undervalued given it retains strong growth potential, is transport and logistics group Mainfreight.
It is picked by three brokers: Craigs Investment Partners; Hobson Wealth Management and JBWere.
"It's is a well-managed business with global growth options. Leveraged to robust economic growth," says Craigs Investment Partners head of research Mark Lister.
"Mainfreight should be well-insulated from increasing interest rates and has a very strong market position in New Zealand, which should continue to benefit from strong local growth, but it also offers some international exposure given is growing operation in Europe, the US and Asia."
JBWere's Ward notes: "Trading on 20 times earnings means they might appear expensive, but good companies tend to, and MFT is a good company."
From there several stocks feature twice in the 2017 picks.
Contact Energy also merits three picks, from JBWere, Craigs and First NZ.
"Contact has lagged its peers in recent years, so it looks like the value play in the sector," says Lister. "It has the potential to increase its dividend payout, and the retail strategy could bear fruit in 2017.
We also like the idea of hedging our bets a little, by including one yield stock.
Mark Lister, Craigs Investment Partners
"While rising interest rates could be a headwind for companies in the utilities sector generally, we see a number of company-specific reasons why Contact could still deliver reasonable returns.
"We also like the idea of hedging our bets a little, by including one yield stock."
Craigs and Hobson both pick Restaurant Brands, very much with an eye on its growth potential following a major investment in Hawaii.
Restaurant Brands has offered US$105 million ($151m) to buy Pacific Island Restaurants, the largest fast-food operator in Hawaii and the sole Taco Bell and Pizza Hut franchisee in Hawaii, Guam, and Saipan.
"Restaurant Brands has a solid track record, capable management and offers stable earnings," says Lister. "The core New Zealand KFC franchise will see free cash flow steadily increase in the coming years, enabling the company to invest in growth areas like KFC Australia and Carl's Jr."
Another other stock picked by two brokers was dairy company Synlait; picked by MSL very much in growth mode and more indicative of the smaller cap stocks in the game this year.
The company has a market cap of $100m and won best growth strategy at the Deloitte Top 200 awards. It has invested heavily in the past and is well positioned to cash in on China's demand for infant formula.
The Fonterra Shareholders fund is a favourite of Craigs and JBWere.
"We continue to see underlying operational improvement in FSF. A change in compositional mix, with a management team committed to addressing inefficiency, has seen tighter controls on costs and capital expenditure, leading to margin expansion," says Ward.
Lister notes that rising dairy prices represent a headwind in some respects "however, the business transformation is well underway and recent operating results have been impressive, the company is reducing its cost base and improving efficiency, while the period of heavy investment has come to an end.
"We believe these factors are yet to be reflected in the share price, which offers attractive value," he says.
Beyond these four the brokers have cast the net wide.
Other stocks that fit the mould of "blue chips on sale" might include Auckland International Airport , picked by MSL Capital Management; Tourism Holdings and Infratil picked by Forsyth Barr; Contact Energy picked by Craigs and JBWere.
Hamilton Hindin Green has a number of similarly high quality NZ companies that look like good value at the moment, says Smalley.
It also included Chorus, Genesis Energy and Ryman Healthcare with Opus international as its wild card.
"It's about buying quality businesses when they are on sale," Smalley says.
Education group Evolve rounds out the stocks to receive multiple picks.
Ward says his team see Evolve as well placed to benefit from further government moves to support mothers in the workforce and notes the trend has similarities to the retirement sector several years ago.
"Acquisitions, developments and cost-out initiatives will see strong near-term earnings growth from a roll up growth opportunity," he says.
Beyond these companies there are plenty of small cap stocks and less familiar names in the mix this year.
MSL picks Green Cross Health, a small player it has chosen for a second year in a row, in what managing director Andrew McDouall describes as "a hot sector benefiting from an aging population, regulation and industry structure changes."
Vulcan Capital is picking natural healthcare products company Promisia Integrative as well as cancer diagnostics company Pacific Edge and NZ Salmon.
She helped out last year and was kind enough to help out this year as well.
Well, this year has been a good one for stocks on the NZX.
6324.26 vs 6824.00 as of today's date. The returns have been around 8%, to the overall investor, if you look at the overall index - that is without accounting for dividends. I personally have got around a 30% return and that just keeps increasing as time marches on (and they will continue to increase) and I havent really bought much this year - because I don't have any cash - my lawyer currently gets that! There have been many ups, the market in New Zealand was up to over 7400 in September and many downs, the index was down to 6174 in February. Likewise the Dow Jones Index was up from 17,148.94 on 4th Jan 2016 to 19,216.24 on the 6th December. Brexit and a whole host of other "its" have foisted their ugly head at us but regardless the world stays intact, we still make money and we always will. I will. With that in mind I will make a start. Let me start where I always start with my biggest holding,
Sky City Entertainment SKC.
At the moment, it is a steaming buy. Especially at below four bucks. Any lower, and it could go lower, it is a steal. Big things are happening at Auckland Casino, Adelaide and these are all wrapped up for a long time yet - till 2048 in Auckland Casino's case. There is talk surrounding a take over or merger with Sydney's Star City Casino but that is a rumour and I don't care, I don't want to sell. Fisher & Paykel Healthcare FPH is a perennial pick, picked again last year, it improved substantially this year and took a dive from $10.93 to end up $8.20 at time of writing. 2017 will be its year and you may be able to grab it sub 8 bucks. You just don't know. The German injunctions granted against FPH's German subsidiary have been lifted and this will transfer to the injunctions in the US Courts. Plenty of money being spent, new things being created and sold at less and less cost.
All this means good things if YOU are already a shareholder.
Mainfreight Ltd MFT is well on track to deliver the goods in 2017. This has been Mainfreights year, $15.36 on Jan 1 and $20.45 as I write this and a recently announced and increased record profit and a forward looking year looking positive in numbers - the only black spot is the US division. Time will take care of that. That is why I have been a holder of this company for well over 10 years. I receive a 10% plus net return on this one. Auckland Airport AIA, it delivered in 2016, it will again in 2017. It started the year at the high levels of $5.75 and trades this morning, 6th December, at $6.30 and traded as high as $7.75 as recently as September 1.
It could bust through 6 bucks in which case you should be in. In fact and I will go off topic for a bit, the lower the stock you are interested in buying, have been following, done the research on etc, etc the more you should buy. I did this during the GFC and it has paid off handsomely - anyway. Back to Auckland Airport. Its in transition right now - that is it is undergoing transformation - once this transformation is complete the port will be a stunner. Flash and new. And it will begin again. With all this building will the port become less profitable? No increasing profits are the rule and they have been for some time. All those assets that they have, the land, the buildings are all central to the core that this will have lift off. Ryman Healthcare RYM is of course a definite push for the entry doors as this keeps getting bigger and bigger. Ignore all broker conflabs about when to buy etc. Do your own research and find the time to get yourself involved. This company is set to almost double in size within the next 5 years and their Melbourne sites are set to quintuple before 2020 and eventually get far bigger than little old New Zealand. Contact Energy CEN, get it while its under or close to 5 bucks. Its got a clear 4-5 years ahead as far as capital returns go. You just don't know when this stock is going to surprise you. With special div's and share buybacks this share has been a good one in the Share Investor Portfolio. It will continue. The Warehouse WHSis included this year as opposed to last year where I dropped it. I still have long term doubts but with recent buying by one James Pascoe taking him up to about 20% I have to re - consider. I would rather have a piece of this rather than not, so I am only picking this for some M and A action next year. Do not pick this for the long term - its a loser. Lastly my pick is Hallensteins Glassons HLG, You have to be PATIENT but you can pick it up and all day long its paying 10% plus.
And the best thing about it is that its NOT covered by analysts and brokers (surely two of the most painful words in the market-mans (see what I did there and I will do from now on) So you can make your way without the bluff and bluster. Its due for a market upgrade in about a weeks time, when they have their AGM in CHCH. Everything is looking good for a LARGE upgrade in profit. Its a good stock.
Told ya Id be biased. Well if I cant get behind my stocks and sell them who else is going to.
Pick these stocks on dips in their share prices - they ALL have dips. AND - do your own research - lots of it. If your picks line up with mine good and if they don't that's also good because that is what makes a market. It makes things interesting as well. Next year could be another one like we have already had - some dips but mostly up - or it could - drop but be mostly down. Whatever it is it will provide opportunities for all of us to make money See you next year. Darren P.S. If you have your own picks put them down at the bottom and tell us WHY you picked them. www.shareinvestorforum.com Share Investor's Annual Stock Picks
I don't know whether the latest Chinese foray into foreigners taking business off them by Arresting 18 Aussies in China but the following is Morningstar's reaction to yesterday's news.
Do with it what you will.
Detention of Crown Employees in China Elevates Risks for All Australian and New Zealand Casinos
Chinese authorities' detention of executive vice president VIP International Jason O'Connor and 17 other Crown Resorts employees has clear negative implications for the company, as well as for Star Entertainment and SkyCity Entertainment. Unfortunately, estimating the extent of the impact is almost impossible at this stage, particularly as the reasons for the detention remain unclear.
What is clear is the elevated risk profile for all these operators' exposure to the Chinese high roller market. In fiscal 2016, 27% of Crown's normalised group revenue was generated from the VIP market, 28% for Star and 15% for SkyCity. It is no exaggeration to say that this VIP market is dominated by Chinese patrons. While margins for this segment are lower than the main floor gaming business, VIP is an important driver of all these casino companies' long-term growth plans.
Indeed, Chinese high rollers are a major plank underpinning Crown's AUD 2.0 billion Sydney casino project, Star's AUD 2.2 billion investment (across STAR Sydney, Jupiters Gold Coast, Queen's Wharf Brisbane) and SkyCity's NZD 1.0 billion capital spending (across Auckland and Adelaide).
While the latest development in China vindicates our high uncertainty ratings for the casino companies under our coverage, we have maintained their fair value estimates at this stage (AUD 14.50 for Crown, AUD 4.00 for Star, NZD 4.40 for SkyCity).
We are reluctant to make a snap judgment on the impact of the Crown employee detention on the intrinsic value that we have on all these casino operators. There will clearly be an impact on earnings if there are any tightening restrictions on how their employees can promote Australia's "tourism appeal" to Chinese high rollers without directly marketing the group's casinos. However, much of this is merely conjecture at this point and certainly forms no basis to change our moat ratings for Crown (narrow), Star (none) and SkyCity (narrow).
