FYI | May 22 2012
By Rudi Filapek-Vandyck, Editor FNArena (currently traveling abroad)
This week's Weekly Insights analysis triggered the question below from FNArena subscriber Stephen Sheldon. I thought I'd share my response with all other readers and subscribers. Non-paying members will receive Monday's Weekly Insights story on Wednesday via email, as per usual.
QUESTION: Hi Rudi. I really enjoyed your well-considered article today. Are you still a fan of BRG, TCL and AAD? And, for that matter MND (will they be affected if the miners pull back on investment?) and ASZ?
ANSWER:
Stephen,
You can now own a well-managed company with a fan-tas-tic track record, offering 6% in fully franked dividends, with forecast profits growth for shareholders in excess of 20% for years (multiple) ahead at a multiple of 14.
Do you think it's a buy? I'd say the answer is a firm yes.
Of course I am talking about Monadelphous ((MND)). This shows you just how little intelligence there is when fear and irrational selling take hold of the public market. Not many people actually understand what's going on in that sector, so beware for commentators and supposed experts who are predicting gloom for the services providers.
The quality names in this sector should be regarded as very good opportunities at these beaten down price levels.
In response to your questions about the other companies: have a look at the chart and the info available in Stock Analysis for each of them. While I remain supportive of all of them, you will have to teach yourself to see as to why Breville ((BRG)) and ASG Group ((ASZ)) are now too pricey.
Transurban ((TCL)) and Ardent Leisure ((AAD)) are dividend plays with the incorrect perception of being defensive. Well, Transurban is, Ardent Leisure is a stock that trades on dividend support, currently in excess of 10%.
What this means is that if and when commodities have their rally, which will happen at some point, stocks such as TCL and AAD will be left behind and they will become cheaper.
I am in essence explaining to you why a good investor in the sharemarket is essentially a contrarian, not a follower of the herd.
Cheers
Rudi Filapek-Vandyck
Your Editor
IMPORTANT INFORMATION: The response above contains general and educational information only. Investors should always consult with a licensed professional before making investment decisions.
To have the correct framework for the response above, investors should read it in conjunction with this week's Weekly Insights "Resources Stocks: And What Now?", including the references mentioned at the bottom of the written story.
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