Thursday, September 28, 2006

A couple of speculators

Here are a couple of speculators that have passed my intial look over.

I still need to go over them a bit more but I think they are worthwhile investigating if you are looking for some speculation stocks to add to your portfolio.

The first is Amcom Telecommunications Limited (ASX:AMM) . They are a broadband provider that should make a high return on their investments in the near future. They are signing up customers like crazy and the cash is starting to roll in.

The second is Legend Corporation Limited (ASX:LGD) . They are an electronics engineering and manufacturing company that designs, manufactures and distributes memory based products including memory modules and related computer components. They have moved their operations off shore and are staritng to reap the benefits. They should have significant earnings movement in the next few years.

The third is AJ Lucas Group Limited (ASX:AJL). They are in engineering and construction of utility infrastructure for industries including energy, water, waste water and telecommunications industries in Australia and Asia-Pacific. Lucas is the largest directional drilling company in the Asia-Pacific and has advanced technology for infrastructure installation. They have a good customer base, good projects in the pipeline and should continue to deliver earnings in the near future.

The last is Ross Human Directions Limited (ASX:RHD). They are a Human Resources Management and Consulting services to Australias largest corporations and public service organizations. They have a great customer base, are consious of costs and should deliver a continued growth in earnings and dividends for the longer term.

I hope this gives you some good speculators to follow and hopefully they provide a nice boost for your porfolio.

Good Luck.

Thursday, September 21, 2006


ARB Corporation Limited (ASX: ARB) has had a great run over the many years it has been listed but I think the fundamentals behind the business are starting to change.

HIGHER petrol prices and interest rates put the brakes on new car sales last month, with new figures today showing gas-guzzlers are out of favour. New motor vehicle sales fell a seasonally adjusted 2.3 per cent to 78,974 in August, from 80,810 in July, the Australian Bureau of Statistics said. CommSec chief equities economist Craig James said high petrol prices slowed vehicle sales in August, although sales were expected to accelerate in the coming months.

Gas Guzzlers ( Four wheel Drives) are taking the major hit. I believe this might have an impact on ARB's sales as their main revenue is 4x4 accessories. ARB Management has said it anticipates further growth in 2006/07, however the rate of growth and the companys overall performance will continue to be influenced by external factors such as general economic activity, fuel pricing and the value of the AUD.

This may present us with a buying opportunity in the near future. ARB has been a good company and if they can continue to show growth then it might be worth a buy if we can get it a bargain levels. A bargain price for ARB would be around 10 times earnings which is $2.30.

For those that hold this stock .. continue to hold but be prepared for a decline if petrol prices rise significantly again.

Good Luck investing.

Kip McGrath Education Centres Limited

Kip McGrath Education Centres Limited (ASX:KME) focuses on the provision of supplementary education to students. It does this through franchising a proprietary tutoring system to owners of Franchised Centres.

Tutoring is still a major area that parents are willing to spend money and this bodes well for KME. Parents still feel a college eduation is paramount to a successful life. The directors report that the number of franchisees and the group revenues have continued to grow, generating a NPAT of $1.059M and EPS of 6.2 cents per share.

One major thing to note abour the companies main revenue source is that the franchisee fees from existing franchisees around the world increased from $2.122M to $2.557M which reflects
the growth in franchisee numbers from 590 to 663 for the year. This is an increase of 20% for the major income source of the company and reflects the fact that franchise fees are a set fee, like an annuity, and rise with CPI every year. The revenue is not affected by a recession or a downturn in franchisee revenue.

Also lets look at the following statement regarding franchise fees :
Further growth from current franchise fees is expected as franchisees do not pay the maximum fee until the third year of operation. The significant uplift in fee income that occurs in the third year of operation will be of particular importance for the UK operations, where centre numbers three years ago were only 43 compared to 243 today.

This all points to future profit and a large one at that.

Another thing to note is that the business is still run by those that started it ( the McGrath family). This usually means the owners treat the business with care and are always wanting to see it grow. They know what has worked in the past and what might work in the future.

This company is creating record profits and no one is buying the stock. It should move from here much higher in the longer term as profits increase and earnings skyrocket.

I do think the current price is a bit high as there are a few risks associated with the company and I would look to buy in around 60c if possible.

This is based on the PE and PEG ratio being at a good level. The dividend yeild is high enough at the current price. but it will most likely drop in the next few payments as they are aiming at a payout ratio of 80% and they have paid 120% and 93%.

Good Luck.

Wednesday, September 20, 2006

IBA Up strongly

Don't want to toot my own horn but IBA has jumped from $0.86 to $0.93 today. This is a 7% increase since my recommendation.

Good Luck.

Monday, September 18, 2006

IBA Health Limited

I have been investigating IBA Health Limited (ASX:IBA) and it might be worth a speculative buy.

IBA Health Limited is a provider of healthcare information systems and e-health services to public and private hospitals as well as community and primary care organisations. The company was established in 1982 and operates in Australia, New Zealand, UK, Singapore and Malaysia.

They are rapidly expanding and they have numerous growth prospects in Malaysia and China. They have a good solid recurring revenue of 15 million and this is expected to rise to 20 million this year. This is good as it doesn't rely on new slaes to drive revenue.

They are reducing costs by moving overseas ( expects 4.5million savings per year but I would suggest this is too high a figure. It will be more likely 2-3 million savings a year ).

They have confirmed their guidance and there is a good interview in the announcements section on their web site.

The PE and PEG ratios are good and they have started to pay a dividend which shows they feel they are in a strong financial position.

Management is doing a good job with patnershipos with other companies and I would expect this to bring continued growth and sales in the future.

Estimtes for this company are for groth of aaround 12% which is not bad at all.

The only concern I have on the comapny is the operating cash flow. But I feel this should be sufficient in the near term and therefore it is a speculative buy.

Price target would be a 10%-20% discount to market which is proced approx 15 times earnings.
This puts a full value price of $1.03 So our buy price should be below 87c (15% discount).

Good Luck investing.

Wednesday, September 13, 2006

JackGreen Limited (JGL)

JackGreen Limited (ASX:JGL) released their prelimi9nary results today.

They had an increase in revenue of 20% but their loss almost doubled to 7 Million dollars. Also their NTA backing fell to 2c.

This is a very poor results for the company and it will be interesting to see where it goes from here. Recently it has fallen from highs of 42c to be sitting at 22c today.

Investors should be dissapointed with the result and should be steering clear of this company until they start to make a profit.

My advice is to not buy companies which proimise to make a profit in the future as they can and do fail a lot of the time. Buy companies which are making money... Its opne of the most basic rules of investing.

JGL Recommendation : AVOID and SELL if you already own it.

Good Luck.

Sunday, September 10, 2006

What I look for when investing

Just thought I would post quickly what I am looking for when investing in a share.

1. A good history of earnings increases
2. A company that is making a profit
3. A company that can cover all its debts easily ( debt to equity ratio)
4. A company that has growth opportunities
5. A company that has a low P/E value
6. A company that has a good P/B value
7. A company that does not have too many risks for major collapse
8. A company that is either reinvesting strategically or providing good dividend
9. A company that has dividend growth

This is generally what I am looking for. If you know any shares which meet most of the available criteria above let me know.

They aren't easy to find but there are a few out there ... just look at how Mortgage Choice (MOC) and Alpha Technologies (ASU) have done in the last 6 months. You can also see good growth in MCW from dividends. BRZ and FUN are starting to bounce back especially now that FUN is getting some major investment from funds. BRZ could be getting an offer from a private equity fund soon I believe (pure speculation on my part) and this should shoot the price up.

Just remember I could be wrong :)

Good Luck

Tuesday, September 05, 2006

Reef Casino Trust

Reef Casino Trust is a good share at the moment if you look at it fundamentally.

Comapny profile
Reef Casino Trust operates in one business segment, that of property ownership and rental in the tourism, leisure and gaming industry, and in one geographical segment, Australia. It is the owner and lessor of the Reef Hotel Casino Complex. The Trust's rental income is derived from the Reef Hotel Casino. Its key businesses include electronic gaming machines, table gaming, hotel room accommodation, and food and beverage operations. During the year ended December 31, 2005, Reef Hotel Casino attracted 1.3 million visitors, of which 25% are from overseas. Its casino's main overseas markets are Japan, South East Asia (mainly Singapore and Malaysia) and China including Hong Kong. In July 2005, it opened up Velvet Rope showroom and Velvet Underground nightclub.


Its sitting on a PE level of 4. Yes thats right a measly 4 times earnings. So we would ahve thought this company had been in a decline with the share price. Well thats wrong too. It has climbed continuously for the last 4 years.

They have had 7 years on continual earnings and profit growth. The distributions are set at 100% (more for the next 4 years).

They are increasing vistor numbers, revenue, EBITDA, earnings, profit, etc, etc, etc.


There are 2 major risks to this stock.

The first is the debt to equity is at 310%. This is way too high. They can cover the interest 9 times but it is still a bit high for my liking. This does need to be looked into as it is not a loan but the liability is a set of interest bearing units. At this stage I do not have all the information so I will assume the figure of 310%. I will be chasing this up though as it may be that this figure is not as bad as it looks.

The second is a lot of ethical funds won't invest in them. This is both a risk and an opportunity. It is what has kept the stock at 4 times earnings.

This is a good stock if you are interested in a long term buy.

Good Luck.