Treasure Chest: SUL, CTD And NCM

This story features SUPER RETAIL GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: SUL

By Rudi Filapek-Vandyck

Stockbroker research has become rather scarce in March as the sector winds down (as it always does) post a hectic February reporting season which this year saw a lot of re-adjustments and re-calibrating of underlying assumptions. This by no means prevents some analysts (not on holidays) from making a big call and this morning we spotted no less than three big calls, all outside FNArena's daily universe of stockbrokers.

First off the rank is Bell Potter where analyst Sam Haddad flatly rejects investor skepticism regarding the growth trajectory for Super Retail ((SUL)). Bell Potter makes the prediction that FY15 will see an acceleration of growth, after a disappointing first half as reported in February, largely due to the Leisure division feeling the impact from the mining sector slowdown. This super retailer is currently making all the right preparations to have its growth engines running at double-digit speed for at least FY15-17, argues the stockbroker.

Ironically, Bell Potter's view does appear but in line with what most colleagues elsewhere are predicting, so this simply appears to be a case of investor hesitance regardless of analysts' confidence. Bell Potter's price target of $13.16 is higher than most in the market, with UBS currently topping our list with a $14 price target. No surprise, Super Retail is Bell Potter's preferred retailer. A Price-Earnings ratio of 18 and prospective dividend yield of 3.6% (consensus forecasts for FY14) are seen as simply "reasonable valuation metrics", in particular in light of the growth acceleration that lies ahead. Buy.

At Morgan Stanley, travel sector analysts have upgraded their rating for Corporate Travel Management ((CTD)) to Overweight, sector rating In-Line. Not only have forward estimates received a boost, but the price target jumps to $7.00 from $5.40 prior.

Morgan Stanley analysts now have increased confidence this company will achieve solid growth numbers in the years ahead, a view further underpinned by recent contract wins. The cherry on the cake will be accretive acquisitions and if the analysts truly do have their finger on the pulse for what goes on inside the domestic travel services sector, then it won't be long before Corporate Travel stands to announce the first of such deals.

If anyone was to take a bet on where the next acquisition is to take place, Morgan Stanley thinks Britain tops the list of management's focus, followed by the US.

Resources analysts at CLSA have stuck their neck out and declared out-of-favour Australian gold miner Newcrest Mining ((NCM)) one of the best risk-reward opportunities available among resources stocks listed on the ASX. This call comes with a few caveats. Firstly, CLSA is taking a three-to-five-year view. Secondly, the analysts assume that management will be succesfull in addressing all market concerns and righting the ship over the next 24 months. Thirdly, and this will be the most contentious element in their assessment, CLSA is working off an average gold price of US$1,600/oz, above the sub-US$1400 price that is reality today.

Regardless, they do point out that if their gold price prediction proves correct, Newcrest stands to enjoy significant margin expansion. CLSA has raised its gold price forecast for 2015 to US$1400/oz. The analysts are comfortable with Newcrest's balance sheet and gearing, implying market concerns are a bit silly. Read: there will be no need for a capital raising. Move on.

CLSA rates Newcrest Buy with a price target of $16. The analysts see mid-term potential for the share price to reach $20.

 

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