Ross Human Directions Limited - BUY

Hi everyone,

My next purchase since JUM has been Ross Human Directions Limited (ASX:RHD).

The reasons I bought this stock include :

Technical bowl poattern forming in chart.
PE ratio is at 8.6
PB ration is under 1.5
PEG ratio is 0.5
Dividend Yeild is 7% fully franked
PS ratio is 0.16 ( Price to Sales )
EPS are forcast to grow by more than 10% for the next few years
The price is under $1.00
Debt levels are at maageable levels (29%)

Also they have had record profits recently.

I got into this share at 62c but I would suggest it is still a good buy up to 65c.

Of course this is just what I did and is not a recommendation that you buy the share as I do not know your financial position :) ...

Good Luck.

JUM - Taking Part profits

I sold out of some of my JUM stock today (ASX:JUM).

The reason was that it has risen quickly from 2.3c to 3.2c. That is a huge gain for just a few weeks investment.

I have taken profits out of the stock as I don't want to lose these huge gains. I am still invested in the stock but not as much as I was yesterday.

Good luck.

Record breaking day

Rio Tito (ASX:RIO) hit the $100 martk yesterdeay in what was a historic day for the ASX.

Its the first share to make that price and although it slipped back before the close it was still a record breaking day.

RIO has been spurred on from the resources boom.

Mind you there are a number of other shares which could have hit that mark already had it not been for share spilt. Harvey Norman (ASX:HVN) comes to mind.

Good luck

KME and WAL lead portfolio in poor day on market

I bought KME today.

While this has been a selection of mine for a while (bought in at 81c) I think now is a good time to top up the account. The PE is currently sitting at 16 which is high for stocks that I purchase. But the federal budget incentive plus the long term uptrend say this is a raging buy.

I bought in today at $1.395.

Another share which I am still raving about is WAL. I initally bought in at 22c and bought more at 20c and then 17c. It has returned to 20c and I am showing a small profit. When this company decides to do something with the cash it could be a big mover.

Good luck.

Another Great investment at only 2.4c (well I think it is)

I found another share which I just bought into on Monday.

The share is JUM.ASX

It is an interesting company that makes its money from gambling ( so no good for those of you who don't like gambling stocks). There were 2 big draw cards for me with this stock. The first being the amazing run of record profits. The second being a wise investment by management to buy back up to 10% of the shares on offer. This will greatly improve the EPS.

Another big draw card was the low cost to get into this share. It is only 2.4c

The price earnings is sitting around 10 so it is not overvalued at all. Combine this with record profits year to year and you have a great share. This one reminds me of my (still current) investment in ASU. This stock has potential....

Good Luck

WAL - Wavenet

I found a company worth buying because of a number of reasons.

WAL.ASX - Wavenet is a very special buy.

When you look at the company you will notice several things.

1. The company has 9.4 million in the bank.

2. The company only has a capitalisation value of 10 Million.

These two lines should signal something straight away.... They are worth only $600,000 more then the money in the Bank. This is made up money, this is actual money in the companies bank account.

Lets have a look at their reports and we see that the first half of this year they produced a profit of 1.3 Million. Lets assume they make a profit of 2 Million for a full year.

So now we know

The company is worth 10 million.

The companies has 9.4 million in the bank.

They are going to make approx 2 million a year.

Does this not scream takeover opportunity. Someone could buy this company for 15 million, and pull out 9 million from the companies bank account (so effectively they have bought the company for only 6 million). They then own a company producing 2 million a year which they bought for 6 million ( that's a return on Equity ROE of 33% ).

Of course I have simplified the maths above and I assumed a takeover premium of 50%. Lets say the takeover premium is only 20% and you find the Return on Equity increases to 66%. Even for a respectable return on equity of 10% the company could be bought at a premium of only 100%.

The other option for this company is to use the money for an acquisition. Regardless of what happens the share price is going to move and its only going to move one way for this under priced stock and that is UP.

Good Luck.

Where have I been ?

Sorry to all those who ahev been waiting for me to post but I have been really busy.

Lucky for me my portfolio has continued to shine and is up a good percentage this year again.

I will try and get posting again on a regular basis as I find shares worth metioning.

Good Luck.

End Of Feb Portfolio Update

Once again sorry for the lack of updates. I just have not had the time to post anything but I have kept in touch with the market. There has been some significant movement in the sharemarket recently and I just realised I have not put up the End of Feb figures for the portfolio.

Positions Changed:
None

Current Position:
RHD Bought at 65c now trading at 69.5c for a PROFIT of 4.5c (7%)
SCV Bought at 80c now trading at 77c for LOSS of 3c (-4%)
FEA Bought at 63c now trading at 71c for a PROFIT of 8c (12%)
CKL Bought at 59c now trading at 51c for LOSS of 8c (-14%)
MCP Bought at $2.65 now trading at $2.93 for a PROFIT of 28c (10%)
ASU Bought at 3.3c now trading at 3.1c for LOSS of 0.2c (-6%)

Portfolio
Cash : $51,066
RHD : $10,692
SCV : $ 9,625
FEA : $11,269
CKL : $ 8,644
MCP : $11,056
ASU : $ 9,393

Total : $111,745

Monthly Performance
Month 1: Profit of $4,688. Annualised this is a gain of 56%.
Month 2: Profit of $6,844. Annualised this is a gain of 78%.
Month 3: Profit of $ 213. Annualised this is a gain of 2.5%.

Closed Trades :
ITD Bought at 41.5c SOLD at 57.5c for a PROFIT of 16c (38%)
AVE Bought at $2.19 SOLD at $2.65 for a PROFIT of 46c (21%)
MPH Bought at $0.225 SOLD at $0.34 for a PROFIT of 11.5c (51%)

Commentary
It is very hard to find profitable stocks even thought the market is very volitile and is falling and rising every few days. I am happy that February ended in a profit although had I been watching it more closely I would have been out of a few stocks with a much higher profit ( we could have ended the month up around 4-5K). Anyway I still think these are the stocks to own and I will be holding them till a later date when I feel the are overpriced.

Good Luck Investing.

Market Stumble...

I apologise by the lack of posts recently but I have been extremely busy.

But I still thought I should jump on and mention the impending stumble that should happen to the ASX today after the China and US markets took a dive last night.

Will the dive be as much here in Australia ? Probably not as I expect today's drop to be around 3-4% and it will continue to slide till it is off around 10% in the next few months. Its hard for the market to drop too much due to the amount of superannuation money being put into it.

Anyway good luck and I hope you have been waiting for this as I have. There will definitely be some buying opportunities coming up for those who waited for the inevitable drop.

Good Luck.

Shareholder Benefit Updated

Just to let you know I have added more shareholder benefits to the Shareholder Benefits Blog

The following shares have been updated or added:

• ANZ Banking Group Limited (ASX:ANZ)

Good Luck Investing

Etrade buyout offer

Etrade Limited (ASX:ETR) has either just suddenly acquired knowledge of a takeover talk or they were not telling the truth to the public back on the 16th Jan. See my article here on the inital gossip that takeover talk was underway at etrade.

ANZ Banking Group Limited (ASX:ANZ) plans to beef up the offerings of online broker ETrade Australia if its $268 million bid for the rest of the shares it doesn't already own is accepted by shareholders. ANZ, which owns just over 34 per cent of ETrade, says it is the natural owner after putting forward a $4.05 per share offer.

I also had an article here on how ETrade was going to boost the profit of ANZ and that ETrade might be a good acquisition.

Good Luck Investing.

Funtastic trying to hide takeover talks

There was some news today on Funtastic Limited (ASX:FUN):

Toy company Funtastic says it has received an approach that could lead to a takeover bid. Day care chain ABC Learning says it has been approached by a third party regarding its stake in Funtastic. Any takeover would have to be approved by ABC Learning. It says the plans are in the early stages. ABC Learning has also reported a 57 per cent increase in after tax half-year net profit to $64 million.

Another article says :

When it came to playing down a takeover approach, Australian toy company Funtastic took no chances. In a mastery of understatement, the company confessed it had received a “confidential, preliminary, incomplete and currently unfunded,” proposal. So top secret and confidential was this approach that Funtastic shares, which fell sharply in November after the company predicted that its results would not meet expectations, jumped more than 5 per cent on Friday, prompting a query from the stock exchange regulator. The shares traded up almost 10 per cent further on Monday to A$1.94. So preliminary, that the company’s biggest shareholder, ABC Learning Centres swiftly followed with a statement that it too had been approached about its 18 per cent stake in Funtastic but that no decision had been made. And so incomplete, that they’ve already got round to talking funding. In fact, this approach was obviously so trifling that, more than five hours later, Funtastic’s statement was still strangely absent from the ASX announcements section of the company’s website. A.B.C, Australia’s top childcare centre operator, said it had not made a formal approach to Funtastic itself but had been approached by another party.“A.B.C. has been approached by a third party in relation to a joint transaction which, if implemented, would result in a change in control of Funtastic,” A.B.C. said in a statement.

Looks like Funtastic has finally got a move on. I have been preaching the value in this company in various posts such as here, here and here.

It has been a main part of my portfolio for a fair while now and I have made gains from $1.20 up to the current price of $1.90

I believe the price on offer if it comes will be in the $1.90 - $2.10 range although it may even be higher. The prospects for this company are being driven by the current baby boom occurring around Australia due to the baby bonus being offered by the federal government.

I am interested in seeing the price that may be offered but at this stage it is still in very early dealings and the whole thing may fall through. It is interesting to see the understatement being made on the takeover. It may be looked into in the future by regulators as directors not making all information available to the public timely is rather reckless.

This is one to watch in the next few weeks.

Good Luck Investing.

Market Above 6000

I know this is a late post but congratulations to traders for pushing the market over 6000.

No matter where you look these days analysts are stating that the market is approaching full value, is fully valued or is overvalued. I am one of the analysts saying the market is definitely overvalued.

The market is trading at a PE of 17 which is higher than the adjusted ( for booms, crashes) PE range of 14.5-15.5. This means the market is overpriced by at least 9.6%

I have also been reading that people were amazed at how quickly the market shot up 1000 points. This is only 20% and the last year has been a good year for the market. It took 11 months to make the range.

Anyway lets hope for some sideways movement or even a bit of a decline as the market is defying gravity at the moment. And as they say the further it goes up ... the further, and quicker it drops.

Good Luck Investing

Launch of Share4holder Benefits Blog

How many times did you look for shares that gave you that bit extra, or as a superfund how many times have you had to be careful on the shares you are purchasing as they have additional shareholder benefits that can cause legal issues ?

Well here is an easy way to find out those shares that have an extra bit of punch for the shareholder. I have launched my shareholder benefits blog and I hope to add 1-2 shares per week to the blog analysing the benefits which are currently offered.

I have launched the blog with an analysis of two companies that offer discounts to hotels and theme parks.

The blog is located at : http://shareholderbenefits.blogspot.com/

Please come and visit and gain some insight into those shareholder discounts and shareholder benefits you never really hear about but always wanted to know about.

Good luck Investing.

United Group results look satisfactory

Engineering firm, United Group Limited (ASX:UGL), has performed satisfactory in the first half of 2006-07. It posted a net profit of $35.3 million, which was actually slightly lower than the same period from the previous year due to an $18.1 million write-down. But fortunately EBIT improved 23% to $62.3 million and revenue increased 18% to $1.3 billion.

United Group predicts growth to be strong in the second-half of 2006-07.

United Group is sitting on a price earnings (PE) ratio of 19 and a dividend yield of 3.3%. This is fairly standard in the market and unless they can find more growth in the second half of the year I don't see any value in the company. The $18.1 million write off hurt the result significantly but it does show the underlying fundamentals of the company are sound. My only concern with the company fundamentals is the 50% debt to equity. This is fairly high and a downturn in the industry will be a major issue for the company.

At this point of time I say wait for a better price.

Good Luck Investing.

Coles still a takeover target

Analysts from Investment banks are convinced that a further takeover proposal for Coles Group Limited (ASX:CGJ) will be forthcoming.

The retail group's management is adamant it will maintain an integrated company with stores rebranded to Coles, but many investors are hungry for a split of assets. Such a sale could attract up to $20 billion, with the supermarket section itself worth $A13 billion.

Coles is due to release its half-year profit figures in March and there is speculation that this may be the trigger for takeover movement. The recent takeover bid was $15.25 per share and even then the board's position was that it undervalued the company. Since the takeover rejection the Coles share price has slowly risen to $14.70.

As far as valuing the company, it is currently sitting on a PE of 23 with a PEG ratio of 2.28. These are fairly high but are lower than its major competitor Woolworths Limited (ASX:WOW) which sits on a PE of 26. Analysts expect Woolworths to make a gain of 30% on its EPS in the next two years while they are expecting Coles Group to make a gain of 31%. Based on these figures you have to think that Coles is slightly underpriced to its major competitor but is still overpriced based on conventional fundamental techniques.

I suspect analysts are expecting Coles and Woolworths to continue to make profits from the alcohol and petrol stores. They may also be gaining a slight market share from some independent grocers. They could also expect that the companies might get into the pharmacy business which could offer a large growth area. Inflation might also add 4%-5% to the EPS but truthfully I think these estimates are too high. Yes Coles and Woolworths are good companies but you need to get them at a much lower PE ratio if you expect to make a good gain ( double figures in percentage points) you need to get them at a reasonable price.

Good Luck Investing.

Fairfax Record first half profit

Fairfax Media Limited ( ASX:FXJ) has produced a stunning result by reaching $1 billion in its first half year profit. The results were strong except for a poor result in advertising revenue from New South Wales.

The Chief Executive Officer (CEO), David Kirk, informed the market that there had been a great fluctuation in advertising revenues between the different states. He also comment on rumours that Fairfax had received takeover approaches. He denied that they had been in talks with anyone but did mention that the business was very interested in moving into regional radio.

Within the last two years, permanent costs have been reduced by $44 million. The Age building is also up for sale with a potential price tag of $60 million.

This result shows upper management finally making some nice gains for their hard work. In particular I was impressed with the reduction in costs. I was also impressed at the diversity of the company where they were still able to make a record first half profit despite a poor result from NSW advertising revenues.

Fairfax is currently sitting on a PE ratio of 20 with a dividend yield of 4%. Analysts expect profit to grow in the next two years to 29 cps compared to the current 24 cps. There is a built in premium to this share as it is a potential takeover target and it has a good management operating the business. They are positioned well for the future and if you can pick them up at a PE around 15 you will be getting a good business at a reasonable price. A price earnings ratio of 15 would require a share price of $3.60. Using the future estimated EPS for next year of 27c the PE ratio of 15 would require a share price of $4.05. Still a long way off from the current share price of $5.00

Good Luck Investing.

Amcom admits to talks with Telecom NZ

As I reported earlier Telecom Corporation of New Zealand Limited (ASX:TEL) has been on the acquisition hunt with the cash they are expecting to receive from their sale of the New Zealand Yellow Pages business. Amcom Telecommunications Limited (ASX:AMM) has admitted that they have had discussions with Telecom Corporation of New Zealand (NZ).

The small Western Australian telco confirmed that industry rationalisation had been discussed with the NZ group. Acquisition of Amcom would give Telecom NZ a controlling stake in Internet service provider, iiNet, as well. This is indeed an added bonus on this purchase. However, any deal will depend on rural company, Futuris Corporation Limited (ASX:FCL), which holds a 47 per cent stake in Amcom. Telecom NZ has also made a $A320 million bid for PowerTel Limited (ASX:PWT).

As I have said earlier I think this could be a good buy for Telecom NZ. The more I think about this deal the more I like it. I think getting iiNet thrown in will be a short term cash earner. Telecom NZ has not had to take the major risk of turning iiNet around (it is slowly happening) as it is a more stable company today then it was several months ago. My preference (and probably Telecom NZ's management) would be to wait till iiNet builds up their subscriber base again and then sell it to a competitor. I don't think Telecom NZ want to be in the business of an Australian Internet provider.

Overall Telecom NZ's management has done well in the face of regulatory issues and is building value for its shareholders. As a longer term share I am wary that further regulatory problems could arise so I don't think it is a great buy at the moment.

Good Luck Investing.

Uranimum mine more than 5 years off ....

Experts are estimating that the next uranium mine in Australia will take five to seven years to bring into production. Greg Hall, managing director of Toro Energy Limited (ASX:TOE) and a former mine manager at Ranger and Olympic Dam, believes the Australian Labor Party will reject its three-mines policy at its national conference in April 2007, and this will clear the way for a resurgence of uranium exploration activity around Australia. He said additional requirements from China and India would ensure continuing global demand for uranium.

Uranium is the hot stock at the moment and companies that are even mildly associated with it are taking off. Definitely a place for the contrarian fundamental investor to be cautious.

Toro Energy is focused on Uranium Exploration in South Australia. The Companys tenement interests cover in excess of 26,000 square kilometres in the Gawler and Curnamona Cratons. Projects include Kingoonya Project, Narlaby Project, Yaninee Project, Roxby - Acropolis Project, Pandurra Project, Mount Woods - Warriner Creek Project, Radium Hill - Bonython Hill Project, Lake Frome Project and Nonning Project.

It is always a place for speculators though and every investor may want to speculate now and then.

Good Luck Investing.

McGuigan Simeon Wines using muscle

It seems like McGuigan Simeon Wines Limited (ASX:MGW) want the best of both worlds. Allegations that McGuigan Simeon Wines may have taken advantage of its market position are continuing to be investigated. By 12 February 2007 the Australian Competition & Consumer Commission (ACCC) had interviewed dozens of winegrowers.

Relations between the company and growers have been rocky since early 2006 when it suspended supplier contracts due to an oversupply of grapes. Now the impact of the drought has reversed the situation and McGuigan has demanded the suppliers provide grapes under the contracts. The rub is that spot market grape buyers are paying around $A400 per tonne and McGuigan is offering only $A200 per tonne.

The ACCC action is seen as the last hope for grapegrowers to combat the supply and cost imposition.

What does this mean for investors ? Well if McGuigan get there way then they will be able to increase profit margins but if they don't it could be very costly to them. One thing management shouldn't do is burn your suppliers.

McGuigan is overpriced on any future earnings. Given that management is also creating poor relations with suppliers I would stay clear of the company.

Good Luck Investing.