Sell Alumina, Buy Bendelaide

This story features NATIONAL AUSTRALIA BANK LIMITED, and other companies. For more info SHARE ANALYSIS: NAB

What?

Market strategists at Goldman Sachs advise their clientele to Sell shares in Alumina Ltd ((AWC)).

Why?

Goldman Sachs has a rather subdued view on the near term outlook for aluminium prices, noting the market has remained and is likely to remain in surplus for longer. Above all, the stockbroker believes that on a twelve months horizon Alumina Ltd shares will generate a net negative return while the Australian share market as a whole is anticipated to yield double digit total investment returns over the year ahead.

Some Background

Goldman Sachs strategists have added Alumina Ltd to their Conviction List as a Sell. This is a rather rare occurrance. Most names on the list are there for positive reasons. As of today, Goldman's Conviction List contains BHP Billiton ((BHP)), Iluka ((ILU)), National Australia Bank ((NAB)), UGL ((UGL)), Wesfarmers ((WES)) and Woodside ((WPL)) as positive recommendations "with Conviction". Alumina shares are the only one on the negative side, showing the stockbroker's conviction in the Sell rating.

We note that stockbroker RBS also issued a report today lining up what this stockbroker believes are prime candidates to either surprise or disappoint with their results in the year ahead. Alumina is mentioned as a prime candidate to disappoint with RBS pointing at the Australian dollar and its potential impact on the company's cost levels.

Citi analysts equally expressed a subdued view on earnings forecasts and share price potential for Alumina in the months ahead.

Having said all of the above, most stockbrokers retain a positive view on Alumina and most of them express the view the shares are undervalued at present.

Also…

Alcoa, Alumina's JV partner, disappointed investors with its Q3 results earlier this week.

We couldn't help but noticing Asian Quant analysts at Citi only picked one stock from the Australian share market to maximise returns from the share market rally everyone is expecting; Bendigo and Adelaide Bank ((BEN)).

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