TFS Corporation Recommendation

One stock I have recently purchased is TFS Corporation.

Company Overview

TFS Corporation Ltd (TFS) is the parent company of the TFS Group, a participant in the Management Investment Scheme (MIS) sector. The Company is an Indian Sandalwood plantation with in excess of 500 hectares located in the Ord River Irrigation Area (ORIA) in northern Western Australia. The TFS nursery has the capacity to raise Indian Sandalwood and host seedlings to plant an area of 125 hectares per annum. The Company has four subsidiaries. TFS Properties Ltd owns the land for the plantations. Tropical Forestry Services Ltd is the responsible entity for the East Kimberley Sandalwood Project 1 and is the project manager for all MIS projects since their inception. Arwon Finance Pty Ltd provides finance for approved applicants in all the MIS projects. TFS Leasing Pty Ltd leases the land to growers that it has leased from TFS Properties Ltd.

Analysis

They have had some sensational results recently and the latest full year results are as good as anything. They are at a very low PE of approx 5 and will be paying a 1.4c dividend which works out to be approx 3.5% yeild fully franked.

The chart of the stock is trending sideways and it is currently at the bottom of these sideways movment. I am looking for a 10% - 30% increase in the share price in the next few months.

I like this company as they have a prodct which has supply restricted. They will not be hurt by the over production of wood chips as they are in a specialised niche of the industry.

There are a few risks such as weather and no proven track record but the numbers are stacking up and it is better to be in early on this than to miss the boat. This is a good long term stock regardless of how you look at it. There is major upside and the share price is currently depressed due to a few political issues.

I bought in at 39c but would have been happy to pay up to 40c.

Good Luck

JetSet TravelWorld Recommendation

I was reading a review on JETSET TRAVELWORLD LTD (ASX:JET) on www.crazyjimsmith.com and based on the chart pattern thought I would take a quick look to see if it would be a worthy buy.

Looking at the chart you can't deny the stock in a trend traders dream.

Looking at the numbers released it looks like the company is being well run. On this years earnings they are at a PE of 14.5 as opposed to 22 which is shown in comsec. They are also doing a good job with dividends and cashflow.

The major risk I see with this company is the oil crisis pushing up airfairs. This will impact on their bottom line. Also increasing interest rates mean people have less money to spend on holidays.

Another big risk is the new CEO. Its always a bit of gamble to see how they go for a few years before their decisions start to make an impact on the bottom line.

But this is a good stock regardless of those risks. The strong earnings upgrades and cashflow position give this company a good base to launch further profits.

Based on this I think you should aim for a price around PE of 10 to take into account the risks. This would be approx 97c-$1 range. A long way from where it is at the moment ($1.38).

definitely one to keep an eye on as earnings rise.. For those that like to follow the trend it might be a worthy share to follow and jump in soon.

Good Luck.

Telstra Limited Sale Finally

Telstra Limited ASX :TLS has had some news on its government ownership. It appears there will be a T3 and the Australian Government will sell off 8 Billion dollars.

This is going to be good for the company as it will remove the majority shareholder issue where the government can still effectively tell it what to do. It will be good for shareholders at the expense of the average user of the telephone system.

But would I buy this company ... definately not. The company will still have way too much regulation and the ACCC does everything in its power to oppose Telstra.

My recommendation is to avoid. Espeically now that the dividends look shaky.

Good luck Investing.

Brazin Limited Results

Brazin announced their results today. Below is some extracts with my comments under the overall heading.

Brazin Limited (ASX code: BRZ) announced a net profit after tax (NPAT) increase of 10.1%
to $11.2 million for the 53 week year ended 2 July 2006 (2005: $10.2 million).
NPAT from continuing operations was $14.3 million (2005: $18.5 million). This was
achieved on a continuing operations sales revenue increase of 13.1% to $525.7 million
(2005: $464.9 million). This sales increase was driven by the acquisition of HMV Australia
in October 2005. Excluding HMV sales, there was a (0.5%) decline in sales revenue. DCK
Australia (diva) was a significant contributor to the group’s profit for the year, contributing
$8.8 million on an equity accounted basis, pre financing costs. After financing costs, diva
contributed $6.5 million to group NPAT.

Cash flow Comments :

Cash flow from operations remains strong, assisted by the good reductions achieved in
inventory holdings, particularly in Entertainment. Despite the acquisition of $10 million
inventory from HMV, Entertainment overall inventory holdings over the year only increased
by $3 million. $10.9 million of dividends were received from diva, including a preacquisition
dividend of $4.4 million. Diva dividends were applied to reduce the borrowings
associated with acquiring diva.

Dividends :


The directors have declared a final fully franked dividend of 2.5 cents per share (2005: 2.5
cents per share), payable on 29 September 2006. This takes the full year dividend to 11 cents
per share (2005:10.5 cents per share).


Overall an ok result for the company and it shows there was no reason for the drop in share price that occured. In particular it should be noted the following : Trading results from July and August to date have met or exceeded budget expectations within each Brand segment.

This is a good sign that the company is starting to manage costs effectively and should result in better results in the future. Still a stock to hold if you own or maybe worth a buy if you don't own it.

Good Luck Trading.

Mortgage Choice Results

Results were release today by Mortgage Choice Limited (ASX:MOC) and they continue to be a shining star in my portfolio.

The highlights included :

• Record net profit after tax $14.8 million, up 16% on FY2005 $12.7 million. (AIFRS $17.9 million)
• Total revenue $126.2 million, up 14% on previous period (AIFRS $142.1 million)
• Earnings per share 12.6 cents per share compared to 10.9 cents per share in FY2005. (AIFRS
15.2 cents per share)
• Final dividend of 7.5 cents per share brings FY2006 total to 14.5 cents per share including a
special dividend of 2 cents.
• Trailing commission of $63million up to 51.2% for FY2006 (as % of total commission income)
compared with FY2005 50.1%.
• Mortgage Choice generated $10.6 billion in housing loan approvals during FY2006 and continues to achieve industry high productivity levels per broker.
• Loan book now stands at $25.7 billion, 18% up on FY2005; this compares to system growth of
13.3% year on year.
• Expected life of new loans remains at 3.8 years, consistent with the prior year.
• Total broker growth strong, increasing to 620 as at 30 June 2006 up from 574 in the previous
corresponding period.
• Franchise growth was higher than the previous corresponding period with Franchise numbers
increasing to 423 as at 30 June 2006, up from 407 in the previous year.
• A total of 64.5% of commission revenues was paid to Franchise owners compared to 62% for the previous period.

Defiantely a share to buy in if it ever becomes reasonably priced again. At the moment the PE is too high and it should be avoided for this reason. It has been in a nice uptrend for a very long time and while I still believe their is lots of upside potential I don't think I will purchasing anymore at the current levels.

A buy around 2.00 would be a great price to get this stock.

Good Luck Trading.

Coles Myer Limited Takeover

Coles Myer Ltd has had a ptoential takeover offer. There has been speculation on this price being up to $18 Billion. The current price of the company is around $16 billion

For the moment I think the share has skyrocketed too far. For those that hold this share they should continue to hold and see what the takeover offer is going to be.

For those not owning it steer clear as without a clear offer it is all specualtion and there is a good chance it could be lower than the current price ( as it was proposed when coles was worth under $14 billion ).

There is also the government to consider as they have the final say on the deal. There is a good chance they could turn this down as it may reduce competition in the longer term.

Keep an eye on it.

BlueScope Steel Llimited - Review of results

Bluescope Steel Ltd released their results today. (ASX:BSL)

All I can say is ouch. The results on first glimpse look rotten. It can't be good that their first slide on presentations is that they have reduced injuries. This is not shareholders main concern( although it is good they reduce this figure). Shareholders are interested in money.

The concensus on estimates this year were around 66c for EPS. They have come in much lower than this at 48c ( after restructuring costs). This is significantly down. Cashflow was doewn 98%. Not a good figure. This was after cap-ex. They have kep the dividend constant to try and entice shareholders not to sell.

The gearing of the company has significantly increased to 39%. Which is bad in the rising interest rate climate.

The costs of this company are rising and they are getting static sales. They need to be able to add the costs when onselling to the customer but are finding compeititon is undercutting them. This is not a good share to be involved in.

We need to see them take control of the company and start to deliver a steady increase in growth of profit and sales. At this stage they are a bluechip which may not exist in another 20-50 years. Definately not a share I want to hold for the longer term.

Buy Price : Do not Buy is my recommendation. (based on long term risks). Management has not shown they can handle the company and until this is done this share should be Avoided.

This may be a good share for trading though .... as it could be volitile in the near term.

Good Luck Investing.

BHP Billiton Limited - Quick Analysis

Hi,

Sorry I haven't updated this for the last few days but I have been very busy. I saw today in the paper that BHP Billiton Ltd is being recommended as a buy.

While I was recommending it back when it was $10 at $28 I have to think twice on whether there will be the continual growth in the future. Commodoties are not rising like the were a few years ago and the stock doesn't look to be undervalued anymore.

The PE is only at 12.75 which is a good number. Its below the market and gives the stock some protection from major falls. The dividend yeild is abismal at 1.5%. But the company does keep on growing the earnings year after year.

The future outlook looks ok as they will conitnue to make money on oil and other commodoties but commodoties seem to be falling recently and after a long boom market this could take a fair hit in the near future.

Overall I see a lot more risk in the future of this company due to the uncertainty in commodity prices. At this stage I would look to get the company under 10 times earnings. This would trigger a re-review when it reaches $22.00

Good Luck investing on the ASX.

AUN - Quick Analysis

Austar United Communications Ltd (ASX:AUN) has had a steady climb recently. This fits our new trend rules.

It has recently produced a report which shows it is finally making money as subscriber levels lift. This has been a good share since they cut out pirated cards which has been shown by the 48% increase in first half profits.

A quick look at the numbers shows :

P/E ratio : 25.60
P/B ratio : -22.43
P/E Growth ratio :1.02
P/S ratio : 3.74
Current ratio : 0.60
Quick ratio : 0.56
Interest Cover : 2.53

This numbers don't show a very good story as they have poor interest cover and a very high PE ratio.

They are looking at a 16c capital return to shareholders if they get a favourable tax ruling. This could be useful in that it would drop your purchase price significantly. The current price is 1.30. With the capital return it would only be $1.14. Earnings increased 40% this half year so if we expect the same for full year results the current earnings should increase to 6.4c. This brings our new p/e ratio at 0.064/1.14 which is 17 times earnings. Still a bit high.

This is a share worth watching as they will continue to grow. If we can get a good price for it where it is at least 12-15 times earnings it would be a good buy for the longer term.

Keep an eye on it .

Good Luck Trading.

At these levels the

Trend is important

I was just looking at some of the stocks I have been focusing on and I have come to a realisation.

The shares which have made large gains ( 50% + ) have all been in a nice steady uptrend at the time I bought them. Take a look at Mortgage Choice Limited (MOC) or Alphatechnologies (ASU).

Compare this to those in a downtrend ( but very good fundamentals ) of Brazin Limited (BRZ)and Funtastic Limited (FUN).

From now on the trend will be very important in whether or not to buy the share. The share should be showing an uptrend which is shown by a higher high and a higher low on a chart.

Good Luck

FUN Further analysis

Another update on the books of Funtastic Limited.

I have been reading through the new share purcashe plan. It should retire approx 10 million from the debt of Funstastic Limited. This will save approx $500,000 in borrowing costs. If they get a greater uptake on the purchase plan it could be as high as 40 million which would reduce the debt level to only 12 million and would save $2 million in borrowing costs.
This all adds to the bottom line although it will be diluted as more shares will be available.

All up I think it is a good decision and I don't see too many negatives with the company. They are going through a difficult trading peiod but are still showing increased sales. Hopefully this continues through the christmas period which is the most profitable season.

All up I think the company is still worth holding at these levels and even with a 10% reduced EPS for the year it is still undervalued considerably. They have kept the dividend intact which is a good sign and should hold the share at this level. The divi for this is 4c ff which equates to a 5.7c unfranked dividend which is a yeild of 3.3% ( 6.6% p.a.) for our purcahse price of $1.725

Good Luck Investing ...

FUN - Analysis Updated

Here is my updated analysis of funtastic limited.

The revenue was up 12%. This is on track
Profit was doen 9%. Interesting figure which needs further investigation.
Profit before amortimisation was up 5.8%. Another interesting figure.

The most important figure ... EBITA was up 13%. That is making me feel more confident.
EPS before amortimisation was up 5%. Interesting figure.

A dividend of 4c is declared which is a nice dividend for a share purchased at $1.725.

Taking a closer looka t the amortimisation shows that it is for intangible assets due to the current acquisitiosn during the year. These include distribution agreements, licence contracts and other arrangements. The biggest chunk is done this year and is reduced over subsequent years. It does not affect cashflow which is important.

The net debt has increased significantly but it is still only at 46.5%.

The amortimization has really made the numbers look bad. But under it all the company still looks ok.

They are offering shareholders the ability to buy $5000 worth of shares at a 5% discount and this will reduce debt. This could be a good idea as it gets rid of debt cheaply for the company. unfortunately it dilutes the holdings of shareholders who do not take up the offer.

I will write some more later tonight or tommorrow as I am going to go watch the contender now. And I don't want to rush any analysis.

Good luck.

Wesfarmers Limited Analysis

Wesfarmers Limited is an interesting company that has a good history rising from $5 to over $40.

Wesfarmers Limited is a diversified group with operations in hardware retailing, industrial supplies distribution, coal mining, LPG processing and distribution, fertilisers and chemicals and general insurance.

This appears to be its downfall at the moment as the current trend is to bad mouth stocks which are diversified.

Lets take a quick look at the numbers.

EPS have grown every year for the last 10 years. Thats conistency.
Dividends have also grown every year for the last 10 years.
Revenues have grown every year for the last 10 years.
Net Profit before Abnormals has grown every year for the last 10 years.
ROE has conistenly been above 12% for the last 10 years but when compared to ROC it is only slightly ahead.

The PE is still a bit high at 14.80 with the market average at 15.29. This is not much of a discount.

The dividend yeild is at 5.7% which is not bad and will probably hold the share at this level.

The company has lots of revenue streams which helps when one of them underperforms. Wesfarmers is always seeking new streams as well. This is good if they don't have a large debt which has been creeping up the last few years. In particualr its debt to equity ration is 68%. Way to high to hold unless it has been assessed.

With all of this I believe a 40% discount is required for the risk. Using the average PE for the market would give us a buy price of $21.16 (40% discount) and using the dividend yeild would be a buy price of $20.60.

The current share price is at $34 so we need a big decline before we can get this stock at a good price. One best left alone at this stage.

Good Luck Trading.

ASU - The Good news ....

It is always nice to own part of a company that starts its communications with shareholders as

"The Company is delighted to report its most profitable year ever."

Looking at the figures you can't complain, sales up, profit up, eps up. It goes on and on.

Now what should be the new price target ... well I would prefer to review the annual report before setting these but the initial numbers are suggesting an increase of 20%-25%.

With this in mind we should assume a price rise somewhere near the 25% gain.
Our old target was a 1.4c so 25% on this is 1.7c A long way below the current price of 2.9c.

Of course those that were able to get in have had a nice gain.... This stock should conitnue to streak ahead in the future.

Good Luck to everyone who took my speculators dream tip.

ASU streaks ahead

Well after the currently loss in Brazin Limited (BRZ) as it falls, its nice to get a nice stock streaking ahead. ASU rose from 1.5c recently to hit 3.0c today. Thats a 100% increase.

I expect ti to steady again before moving ahead with future reports. The company is a good stock and I will be holding for alot longer.

I will report an updated buy price once I have had time to go through the numbers.

Good Luck.

Brazin Limited - Did I get it Wrong ?

Brazin Limited has continued to fall to new record lows today around $1.24

Did I get the analysis wrong ? Well lets look at why it is falling. The company is a collection of companies. I knew this when analysing the company. I also noted that they were removing unprofitable businesses to focus on those making money. That is a top idea which was also noted.

Sionce then the company has come out and have said they are going to have a review to see if they can fix any structure issues and such. This includes maybe selling some of its businesses to private equity firms. There has also been a hint that they may sell the whole business. This has all cast doubt into investors minds and as such a 10% gain we had recently is now a 20% loss.

What should be done from here ? Well my estimates for the company are still the same until I see the financial report. There is still no reason to exit the stock. Those not already in the stock may want to hold out until after more information is available for the restructure.

The stock is still a good buy but the added unknowns is pushing down the price. As soon as the restructure information is available and the full year report is available I will post some more information on this company.

Good Luck Investing.

ETRADE Australia Limited

E*TRADE Australia Limited has come out early to announce to the market that it has had a good year.
They have announced a 27% increase in net profits. EBITDA was up 31%.

Some of these numbers have been boosted by the acquisition of HSBC StockBroking.
But looking at the underlying trend of the chart and the market we can see that ETrade is a good company to hold. It has a nice uptrend and its financials show a good operating profit margin of 36%. They are conitnually expanding and have a lot of room to move as they currently only have 4.3% of the volume being exchanged over the ASX. This could definately increase in the future.

Doing a quick customer check myself I found the ETRADE Australia Limited site to have a lot more information but it was a bit cluttered and hard to find things. Etrade is giving customers value for money but they really need to fix up their design.

All the same the companies numbers are growing and look to be improving. The general market is in consencus with this so all we need to do is determine a point worthy of buying them.

There is only one major risk which is a 6 million tax loss which was written off a few years ago. The ATO is still looking at this and may be holding the stock in check for a few months still. Once the ATO gives up ETrade could take off and jump a lot higher. If the ATO wins then Etrade could fall to bargain levels.

Prices for purchase would be :
Based on PE compared to market : $2.97
Based on PE compared to industry : $3.67
Based on Next year PE Forcast vs current PE ratio : $2.81
Based on Next year PE Forcast vs market : $3.63
Based on Dividend Yeild (at 5%): No Divi Forcasts

If you apply a 30% buffer to all estimates you get the following prices : $2.07, $2.56, $1.96, $2.54. This gives us a very wide range. Based on the chart I wouldn't see Etrade heading down much lower any time soon. I would be aiming to pick the stock up around $2.20 - $2.25 as this gives approx 20% discount to the nearest estimate. Alternatively for those which are risk averse you could wait for the ATO decision before buying in and hope the ATO takes Etrade to court and wins. This would definately drop the share into bargain levels.

Good Luck Investing

MMC Contraian Investment Fund

Company profile

MMC Contrarian Ltd is a Listed Investment Company (LIC) which listed on the ASX in December 2003. The investment portfolio is managed by MMC Asset Management Limited, however HGL Limited is also involved by providing investment advice
Company Strategy

MMCs seeks out investment opportunities that may develop due to sentiment or market driven mispricing. The emphasis of the research process will be on the long term operating performance and outlook of a business. The company identifies investment opportunities that are at a discount to what the manager deems to be their intrinsic value. Goals include a strong philosophy towards capital preservation and a focus on a superior rate of capital appreciation over the medium to long term. The objectives of the company are: to exceed the return of the All Ordinaries Accumulation Index over the medium to long term; pay regular franked dividend; and preserve the capital of the company. MMC Contrarian reported that the companys portfolio returned 6.6% during the quarter ended 30 September 2005. By comparison, the equity component of the companys portfolio returned 12.7%. Core holdings performed strongly during the quarter including Babcock & Brown Japan Property Trust (+33.1%), BPC (+24.2%), and Babcock & Brown Infrastructure (+11.0%). MMC Contrarian reported NPAT of $16.6m for the half-year ended 31 December 2005. Revenues from ordinary activities were $4.84m, compared to 4.57m from the same period last year. Diluted EPS was 7.71 cents compared to 0.94 cents last year. The net operating cash outflow was $1.22m compared to an inflow of $2.49m in the pcp. The interim dividend declared was 3 cents compared with 1.5 cents last year.

Why Purchase this stock ?
This stock uses a contraian point of view to purchase stocks out of favour. It has a good management team and has a good track record of selecting the right stocks for good medium to long term growth. They have a reasonable Dividend yeild for an investment trust and should continue to grow this in the future. They are always actiavely seeking to buy back stock when their own stock is at a NTA discount. NTA is net Tangible Assets and is a good way to determine the price for listed equity funds. Usually they run at somewhere between a -12% and -15% to the NTA.

MMC has identified numerous stocks which are both high growth and high yeild investments. This has allowed some good gains in ceratin stocks. Their portfolio iscurrently weight with PMP (9%) and BBI (5%), ABP(4.7%) and NSW(4.5%). This shows they are not putting all their eggs in one basket but they are taking a good stake in each company that they feel is a worthy investment.

The current dividend yeild for the stock is approx (6c / 93c ) = 6.4% fully franked. The company policy is to create a growing stream of income for investors. This is always nice to see from an investment company.

The price is currently undervalued with the NTA appearing to be approx 119 or $1.19 pre dividend. The share price currently is 93c. This is the highest the NTA has been and the share is at one of its lowest points m,aking it a wise invesment choice.

Risks to this company are the usual invesment risks of all people who buy shares. There is alweays a chance they could drop or a major crash could occur. In this instance I believe the incvome stream will buffer the stock from dramatic falls, and if they do fall the income stream will be a nice handy addition to the portfolio through the decreased capital period.

Personally I own this stock and bought in at 0.93c. It does not move much but should provide long term income streams that add a great value to my portfolio. It is one of the safer stocks which fits into my style of investing.

For further information you should read their June Investment Update...

Good Luck investing ...

Corporate Express Australia Limited (CXP) A Quick Analysis of the results

weiomduWell I had a busy weekend but as I promised some information on Corporate Express Australia Limited (ASX:CXP) I thought I better have a quick analysis of the companys half year results and see if the fall has been too large.

Revenues Climbed 7%. This is a historically low figure for this company and suggests the company is not growing as fast as it has been. The figures for the last few years have all been 10%+. Is the slow revenue growth something to worry about ? maybe ... But I would need to see a few years of stagnant growth before I said it was no longer growing at a good pace. 7% growth still beats inflation.

Profit only gre 1.7%. This is a poor result. But they are not losing money which is a good sign. The company expects that the result was lower due to one off costs which will not occur in the next half and also should add to the bottom line in the second half results. Do I expect them to increase this for their full year report ? Definitely...

Earnings per share were 17.7c . An ok result as this transforms to a result of 35.4c which is higher than last years which was 35.1c . The esitmates for the year range from 39c to 41c. I am not so optomistic but I do expect that they should get to at least 37c. Assuming they do achieve 37c theya re currently at a PE of 13 (price $4.82). If we assume they can achieve analyst expectations and get to 39c it is on a PE of 12.39. Is this a good price for the stock ? Well there is some value in it. The industry historically sits just above the ASX average. At this moment is is 16 times earnings so CXP should be priced at $5.92 assuming earnings of 37c.

Is it time to buy CXP ?

Well it might go lower at this stage. But there are certain factors which might hold it up. These include a divi yeild of 4% and the current buy back of shares which is taking place. If you can get this share around $4.50 or lower it would definately be a good buy in the years to come.

Tehcnically the share should hold at least $4.50 with another level of support at $4.00. I can not see it going lower than this price without some major accoutning flaw or scandal.

The problem is people will soon take notice of this share at this price and will start to buy it as it is definitely a good stock which is out of favour with analysts. We should wait for the turnaround on the chart before putting our cash in but an inital buy somewhere around $4.50 would be a great investment.

I am going to do a full report when I get a chance. This will look at risks, reasons for growth, etc.

Good Luck.

Warren Buffett Quotes

Warren Buffett is by far the greatest investor of the modern era.

Here are some of his quotes which I felt are important and useful for all investors :

"A public-opinion poll is no substitute for thought."

"I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over. "

"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years. "

"If a business does well, the stock eventually follows. "

"If past history was all there was to the game, the richest people would be librarians. "

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. "

"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years. "

"Our favorite holding period is forever. "

"Price is what you pay. Value is what you get. "

"Risk comes from not knowing what you're doing. "

"The investor of today does not profit from yesterday's growth. "

"Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful". "

"Wide diversification is only required when investors do not understand what they are doing. "

"You only have to do a very few things right in your life so long as you don't do too many things wrong. "

And with that quote I am going to finish this post. These quotes need no explanation .. heed the advice as it is well worth it.

Good luck Trading.