Icarus Signal New Entries For Today

This story features MONADELPHOUS GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: MND

Daily update on share prices and consensus price targets.

By Rudi Filapek-Vandyck

Time to reel out one of my personal favourites when it comes to market observations: Too many investors are constantly trying to "time" the market, while they should instead be focusing on "valuing" individual shares.

Monadelphous ((MND)) is a perfect case study within this context. Is this a good company, well-managed and with a sound balance sheet, business model and industry dynamics? It is on all three accounts. Monadelphous is a very good dividend payer as well, often masked by the fact the shares enjoy at times a rather bloated Price-Earnings ratio (PE).

There's no better way than simply looking back at what has happened over the past few months. After surging beyond $22 in March this year, the shares are now back below $18, arguably much better value and poised to deliver much better returns than for whomever joined the queue in March. Monadelphous shares consistently traded above consensus target since October last year. This week the shares sank to more than 7% below target. The PE ratio is now back below 16, the implied forward looking dividend yield above 5% (5.6% for FY12).

As Macquarie analysts highlighted this morning, Monadelphous is one of many services providers that is unlikely to see full benefits from the initial phase in mining capex in the coming year. This is because initial winners are more likely to include the likes of Boart Longyear ((BLY)); companies that deliver products and services dedicated to first phase investments comprising drilling, earthworks and contract mining. Monadelphous and many others will follow later in the cycle when mechanical services, electrical equipment and instrumentation will be needed.

This implies investors will have to be more patient, and this is now being reflected in the share price.

To top off this theme, Macquarie very much likes WorleyParsons ((WOR)), Boart Longyear, Downer EDI ((DOW)), Transfield Services ((TSE)) and UGL ((UGL)) in the sector. When it comes to the smaller players in the sector, preferences go to Ausdril ((ASL)), Seven Group ((SVW)) and Mineral Resources ((MIN)).

In terms of FNArena's Icarus Signal, the list of stocks trading in the vicinity of consensus target has been decimated this week. The list now comprises no more than 10 stocks, with Melbourne IT ((MLB)) and Growthpoint Properties ((GOZ)) the newcomers. Note both join the list from having traded above target previously.

The list of stocks trading above target now contains 17 names, with Tabcorp ((TAH)) shares selling off so severely yesterday, they didn't even make it to the list of stocks close but below target. Campbell Bros ((CPB)), Abacus Property ((ABP)) and Wotif.com ((WTF)) all disappeared from trading close to target after yesterday's price action.

The fact that ROC Oil ((ROC)) and Saracen ((SAR)) pop up in the Bottom 50 illustrates all has not unfolded according to plan for smaller sized energy plays and miners.

As today's share market action looks a lot better, we will see plenty of new names popping up in tomorrow's update.

Investors should consider the information and data are provided for research purposes only.

Stocks <3% Below Consensus

Stocks Above Consensus

Top 50 Stocks Furthest from Consensus

To see the full Icarus Signal, please go to this link

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