Conviction Kitchen

Array
(
    [0] => Array
        (
            [0] => ((BLD))
            [1] => ((NAB))
            [2] => ((QBE))
            [3] => ((WES))
            [4] => ((ALL))
            [5] => ((ASX))
            [6] => ((ANZ))
            [7] => ((WOW))
            [8] => ((WOR))
            [9] => ((LEI))
            [10] => ((BKN))
            [11] => ((WBC))
            [12] => ((MRM))
            [13] => ((RIO))
            [14] => ((STO))
            [15] => ((CFX))
            [16] => ((CHC))
            [17] => ((LLC))
            [18] => ((BPT))
            [19] => ((SAI))
            [20] => ((AMP))
            [21] => ((MGR))
            [22] => ((OSH))
            [23] => ((TCL))
            [24] => ((NCM))
            [25] => ((TLS))
            [26] => ((WTF))
        )

    [1] => Array
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            [0] => BLD
            [1] => NAB
            [2] => QBE
            [3] => WES
            [4] => ALL
            [5] => ASX
            [6] => ANZ
            [7] => WOW
            [8] => WOR
            [9] => LEI
            [10] => BKN
            [11] => WBC
            [12] => MRM
            [13] => RIO
            [14] => STO
            [15] => CFX
            [16] => CHC
            [17] => LLC
            [18] => BPT
            [19] => SAI
            [20] => AMP
            [21] => MGR
            [22] => OSH
            [23] => TCL
            [24] => NCM
            [25] => TLS
            [26] => WTF
        )

)

This story features NATIONAL AUSTRALIA BANK LIMITED, and other companies.
For more info SHARE ANALYSIS: NAB
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

FNArena last updated broker convictions on April 1 – no joke – and since then the market has peaked and eased off and there's been a lot of action in individual stocks.

UBS notes that after the sharp pullback in March, the resources sector surged back to fresh highs and while the strategists see a positive picture continuing in the medium term, they suggest the sector is currently vulnerable to a short term correction. In industrials, UBS likes to use the monthly National Bank business confidence survey as a guide for earnings and given the April result was the highest since March last year, the signs are promising.

UBS suggests stronger business conditions should translate into a pick-up in credit growth, and as such the strategists have moved the banking sector to a “Moderate Overweight” ahead of what they believe might be a positive reporting season.

UBS runs a “Key Calls” mini-portfolio along with a wider “Model Portfolio” of some 27 large-caps. This week UBS has updated its Model Portfolio.

The additions are Boral ((BLD)), National Bank ((NAB)), QBE Insurance, ((QBE)), and Wesfarmers ((WES)). The removals are Aristocrat Leisure ((ALL)), ASX ((ASX)), ANZ Bank ((ANZ)), Woolworths ((WOW)) and WorleyParsons ((WOR)).

Macquarie calls its conviction list “Marquee Ideas” and it, too, has made some changes.

Leighton Holdings ((LEI)) has been the story du jour following its trading halt, announcement of substantial project write-downs and subsequent capital raising. The broker notes the amount of new capital doesn't actually improve the balance sheet and is flagging asset sales to restore order. Macquarie has thus added Leighton as a conviction Underperform.

By contrast, Macquarie sees Bradken ((BKN)) as a well managed company with solid market share in its core products. The market has sold down Bradken on concerns of the impending loss of its ESCO licence, but factoring in the costs involved in developing a new range of tools to replace the ESCO products the broker still sees good value in the stock. It has thus added Bradken as a conviction Outperform.

The broker still has Westpac ((WBC)) as its number one pick amongst the bank majors, but after a good run the broker believes there is now better value amongst other industrials. The broker retains an Outperform rating on Westpac but has removed the stock from its conviction list.

Macquarie has had Mermaid Marine ((MRM)) as a conviction Outperform since early March and again, while retaining Outperform, the broker has removed it from the list following a strong share price run.

Remaining in Macquarie's Marquee Ideas list are Rio Tinto ((RIO)) and Santos ((STO)) as large-cap Outperforms with Boral as a conviction Underperform, along with CFS Retail ((CFX)), Charter Hall ((CHC)) and Lend Lease ((LLC)) as property Outperforms, and Beach Energy ((BPT)) and SAI Global ((SAI)) as emerging Outperforms.

BA-Merrill Lynch also publishes a “Key Ideas” list, but it has not made any changes. On the conviction Buy side, Merrills has AMP ((AMP)), National Bank, Mirvac ((MGR)), Oil Search ((OSH)), Transurban ((TCL)) and Newcrest ((NCM)).

On the conviction Sell side, Merrills has Telstra ((TLS)), Woolworths, Boral, and Wotif ((WTF)).

The market is clearly split on Boral. For the building products company it's a toss up between a soft local building market, offset by opportunities in Queensland, a deathly weak US market, and pending cement price rises. Macquarie and Merrills both have conviction Sells on Boral while UBS has a conviction Buy.

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