ASX cheap stocks

C

capitalist

Is it soon time to buy cheap stocks ?
This article says there's some bargains around but i heard the same thing awhile back and got stabbed trying to catch falling knives :(

With the sharemarket marked down, there are bargains to be had if you can identify the right companies to invest in. With the market how it is, more stocks are going for less than $1, so it could pay to rummage through the bargain bin. These specials aren't confined to speculative mining explorers, either. The going sharemarket discount is 30 per cent below normal values. The trick is to separate shares that are on sale for less than $1 because they have a long way to grow from those that have passed their use-by date. New stocks suffer because analysts don't follow them and fund managers don't hold them.
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So here are 10 stocks trading at a $1 or less analysts say are discounted too far, starting with the cheapest:

1. BSA , Price: 18.5 cents

BSA installs heating, ventilation, airconditioning and fire alarms in offices and factories. It also has a division, oddly named Triple M, that hires out technicians to telcos, broadcasters and utilities, plus it owns Mr Antenna and Mr Alarms.

2. FSA Group , Price: 28 cents

FSA Group says it is ''Australia's largest provider of debt solutions'' but Abernethy's description will do me: ''It's a finance company for people who can't get a bank loan.''

3. Fisher & Paykel Appliances Holdings , Price: 28 cents

''This is a cheap stock rather than a great business,'' the head of equities at Morningstar, Andrew Doherty, says.

4. Coffey International , Price: 37.5 cents

This project manager of high-rise buildings, roads and tunnels has been going for 50 years and has offices around the world.

5. Goodman Fielder , Price: 46.5 cents

A loaf of bread it bakes is worth more than a share in Goodman Fielder.

6. Goodman Group , Price: 58 cents

Goodman? This is a different one in every respect. It's a real estate investment trust (REIT) - or what used to be known as a listed property trust.

7. Transpacific Industries Group , Price: 74 cents

Transpacific owns Cleanaway, which collects and recycles waste - something there'll never be too little of. It also does industrial cleaning.

8. Fairfax Media , Price: 76.5 cents

How embarrassing is this? Fairfax publishes this paper and is trading close to its record low, which is comfortably, or rather uncomfortably, under $1.

9. Sunland , Price: 86 cents

The market hasn't forgiven property developer Sunland from getting heavily involved in the Dubai development bubble - even if it didn't mind at the time - that subsequently burst.

10. Hansen Technologies , Price: 97 cents

This is the company behind your phone, gas and electricity bills but don't hold that against it.
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nww said:
Buy a few bank stocks for up to 8% return.
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Never heard if "diversification"? Banks and property are very closely coupled.

I have no idea why property investors will never look past the banks if they feel a need to buy shares. They think cap gain rules with one but div returns rule with the other. WHY?

Look at 5 - 10 year charts for the banks. They are not attractive, especially NAB.

I don't recommend stocks individually, but I would prefer BHP's 3% div. It is so diversified geographically and across different resources. Besides they have so much cash in their bank they will have to start giving some back to the stock-holders soon.
 
I laughed when the journalist said that he'd start with the 'cheapest', then proceeded to list it by order of price instead. What an idiot - don't listen to journalists.
 
nww said:
Buy a few bank stocks for up to 8% return.
Click to expand...

This is probably the last thing I would be doing. Most of the world's developed economies are, or going to be entering a period of deleveraging... I don't think we're going to be any different in that respect - we may not be there just yet, but we're not far off it either since we are very vulnerable to the world entering a recession or interest rate hikes. Our banks are likely to see their credit squeezed from the Eurozone which makes up 20-30% of their capital.

The banks and property prices are going to be very vulnerable over the next decade. I'd personally rather hold something real like a commodity producing company.
 
nww said:
Buy a few bank stocks for up to 8% return.
Click to expand...

Despite what others say i also think banks seem to be in a better position having learnt some lessons. I also found this article which says banks are currently worth considering.

Want 11.3% from a bank?
November 28, 2011
Greed’s having a minor triumph over fear on the Australian market today, a reversal of Friday’s outcome, as investors are tempted into betting that Europe won’t commit financial suicide.

The temptation is considerable. On Friday’s closing price of $19.50, Westpac shares dividend of $1.56 over the past year represents a yield of 8 per cent. Add on the franking credits and it’s the pre-tax equivalent of about 11.3 per cent.

The other Big Four banks weren’t far behind, the NAB yielding 7.9 per cent, ANZ 7.5 per cent and CBA 7 per cent. As a rule of thumb, risk warning bells should ring when you see the offer of double-digit returns in Sunday fish-wrapper advertisements alongside plugs for miracles with vinegar and magnet cures for arthritis. Yet on Friday afternoon all our big banks were offering just that.

Back in May, when Europe was a serious problem rather than a crisis, the banks required their franking credits to get up to that sort of yield and were still a very competitive investment. Europe’s threat to the global banking system has whacked the local banks’ share prices, but in the process pushed their yields to dizzying heights.

The catch of course is that the dividend payments have to be maintained, which they weren’t in 2009 despite Gail Kelly infamously claiming that they would be. The market was screaming that dividends would be cut and the Westpac board either didn’t know what was happening with their bank, or worse.

The banks’ dividend payments did recover though and the Big Four are now stronger institutions than they were when the GFC first struck, relying less on overseas funding and having painfully tidied up their books.

The likes of ABC Learning, Babcock & Brown, Allco, Citi Pacific, MFS et al have been dealt with. The surviving property trusts have been massively recapitalised and numerous property developers cut off from funding.

The risk of global contagion remains, reflected in the banks’ pricing, but so are those enticing yields. Must be time to ask Gail about her dividend sustainability…

Michael Pascoe is a BusinessDay contributing editor. Disclosure: the Pascoe family super fund holds and continues to accumulate bank shares.
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capitalist said:
Despite what others say i also think banks seem to be in a better position having learnt some lessons.
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Without coming over all weird-sounding, I think the problem isn't with the banks, it's with the financial system. In particular it's the simple fact that globally there is too much debt (leverage) and there is no longer the ability to pay for it (running out of cheap energy).

Until now the rate of getting oil out if the ground has supported the increasing debt. That's not happening any more.

That will coincide with with natural disasters occurring more frequently, like Katrina, and suddenly the money won't be there.
 
redwing said:
I thought we may see ONESTEEL in the list

Where to from here for this company?
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I don't know much about the company, but I do know you can stick a fork in their steel making operations in Oz - when the price of iron ore drops below $120/tonne, Chinese steel makers struggle to sell the steel at a high enough price to recover their costs and steel is bought from countries who are able to produce it cheaper yet.

If they have steel making operations overseas, there might be a chance. I'd hardly call steel making a profitable industry though, it works on the slimmest of margins and it's one I'd steer well clear of.
 
redwing said:
I thought we may see ONESTEEL in the list

Where to from here for this company?
Click to expand...
Why would anybody care?

Onesteel is precisely the type of company "suits" would only invest OPM in.

Anyone investing in the ASX today, reading last year's accounts and listening to silver haired gentlemen on Your money, your call, deserves everything they get. "Value", intrinsic or otherwise, is like gold: Bloody hard to find.
 
Aaron_C said:
I laughed when the journalist said that he'd start with the 'cheapest', then proceeded to list it by order of price instead. What an idiot - don't listen to journalists.
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HAHAHAHA what an idiot, omg why are these people employed and allowed to write articles...
 
capitalist said:
Is it soon time to buy cheap stocks ?
This article says there's some bargains around but i heard the same thing awhile back and got stabbed trying to catch falling knives :(
Click to expand...

BSA: own it already at an entry price of 19.5c, not a big position, but looks good on 'paper'. Concerned about the share price dropping over the year, what do others more knowledgeable about this industry know that i dont. Hence happy to keep my small position. Furthermore if it looks as good i think it does on paper, why arent directors buying more heavily into the stock. From a 'paper valuation' this looks like a buy of the century, yet directors have only bought small quantities. Could it be that the companies earnings are on some form of cyclical high (so it looks good on paper), yet future earnings will return to some form of future gravitational mean (maybe due to competition), or that high earnings are only short term.

FPA: competitive industry, where are their barriers to entry, this stock has been a value trap for a while. Too difficult to estimate intrinsic value. Pass.

Goodman fielder: in other countries this company might work, in australia we have two dominate retail non-discretionary providers: coles/safeway. They exert too much market dominance. Thus Goodman is left with a weak hand. Potential value trap, too difficult to estimate intrinsic value. Pass.

Transpecific Waste: good underlying businesses, sticky revenue. However was leveraged pre GFC based on those underlying businesses. Potentially over paid for businesses. Massive shareholder dilution as debt was too high going into GFC. On my radar, but not interested for several more years. I want everything washed out. ROE is terrible because of its acquisition mode pre GFC.

Fairfax: interesting stock. Took a position recently, offloaded on a stop loss. Still looking, cashflow is significantly higher than earnings, business is turning around (structurally, operationally might take a while longer). Difficult to assess future structural revenue (migration of print revenue to online revenue). Personally if one wanted to 'punt', this stock might be it. Potential for very big returns on a 10 year basis, but stock volatility makes it hard to keep a position without incurring losses. I like the 'turn around story' but am i looking too early: quite high possibility of yes.

Hansen technologies: underlying business looks good on paper, but not at current share prices. However if there is a share price pull back, is that indicative of deteriorating business fundamentals.
 
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Sunfish said:
Anyone investing in the ASX today, reading last year's accounts and listening to silver haired gentlemen on Your money, your call, deserves everything they get. "Value", intrinsic or otherwise, is like gold: Bloody hard to find.
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In the current market i would agree totally, this is not an easy market, lots of potential value traps, lots of uncertainty (structural uncertainty, not just operational uncertainty). I hate structural uncertainty (because it makes valuation models less useful), i love operational uncertainty (because it scares off weak players, when the structural position has not changed).

Together with my belief that we are not out of the secular bear market phase. The secular bear market phase should still last for a number of years, therefore no need to be gung ho and just 'buy the market' if one is looking at a buy and hold. (if one is looking more short term, then there are opportunities to buy and offload as the market reaches technical 'highs')

By the way, i am increasing exposure to the US stock market again. I can see value over there in individual companies that are still in a structural secular earnings bull run, yet the market is focussing on operational issues. (together with the opportunitity to buy these companies with a high AU$), i dont see so many likewise opportunities in the australian market (where i can buy and forget, in australia i buy and have to watch like a hawke)
 
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We're in the midst of a mining boom aren't we :D

AS Gerry Harvey said; with our low unemployment and resources boom, we should be “as happy as pigs in sheets”.

And as pointed out by someone else. Unfortunately for Gerry, and the beleaguered share price of Harvey Norman, “sheets” don’t pay the electricity, water,rates, and food bills.

I've also been watching a couple of managed funds that were mentioned on SS some years back in a popular thread, as they have been taking a continual battering over recent times

Australian Foundation Investment Company (AFI.ASX) and Argo Investments (ARG.ASX)

As have the Navra Retail shares I once held :)
 
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