Good value stocks, post 'em up

[The Mint Man]

Ok considering we have had a bad start to the year I was thinking that there are sure to be alot of stocks out there at the moment that are very good value ATM.
So I was thinking that ASF members could post up stocks that they think are good value at present.
Although I understand that there are alot of stocks that have taken a big tumble lately and are trading well below what they are worth, please don't simply say XYZ stock as it will most likely be deleted by the mods.

Obviously I have a fair few in mind but the one that I will start with (as I have been researching this one for a couple of days) is MFS.

MFS like many financials has been dragged down recently by the whole US 'sub prime crisis' this in itself is bringing value not just to MFS but the market as a whole.
MFS today finished at $3.18, the last time it was this low was around May 2006, however this is in the face of a proposed merger between CITY PACIFIC and MFS.
CIY proposes to:

issue of 225 million new CIY shares in consideration for the acquisition of MFS’s financial services business. On the basis of each CIY share being valued at $3.70 per share and on the assumption that the MFS financial services business will hold ongoing net debt of approximately $500 million the transaction has an enterprise value of approximately $1.33 billion. This consideration is based on the relativities of both company’s confirmed FY08 guidance.

This was announced to the market yesterday following which MFS shot up to a high of around $4.20
See this link for more on the mergerhttps://www.aussiestockforums.com/forums/showthread.php?p=245112#post245112
As I mentioned in the MFS thread, as a result of this merger deal, MFS shareholders would end up with both MFS and CIY shares. CIY will be a property funds management company and MFS will keep stella, which is a travel business. If Flight centre's PE is anything to go off then the future for stella looks very good.

Obviously there is much more pros to this merger that I could delve into (apart from potentially attracting another party to the bidding table) but I think that the above says enough for now.

So post up the stocks that you have your eye on but remember to provide a reason as to why you think they are good value.

Cheers

DYOR

 

[michael_selway]

Re: Good value stocks, post em up.

Ok considering we have had a bad start to the year I was thinking that there are sure to be alot of stocks out there at the moment that are very good value ATM.
So I was thinking that ASF members could post up stocks that they think are good value at present.
Although I understand that there are alot of stocks that have taken a big tumble lately and are trading well below what they are worth, please don't simply say XYZ stock as it will most likely be deleted by the mods.

Obviously I have a fair few in mind but the one that I will start with (as I have been researching this one for a couple of days) is MFS.

MFS like many financials has been dragged down recently by the whole US 'sub prime crisis' this in itself is bringing value not just to MFS but the market as a whole.
MFS today finished at $3.18, the last time it was this low was around May 2006, however this is in the face of a proposed merger between CITY PACIFIC and MFS.
CIY proposes to:
This was announced to the market yesterday following which MFS shot up to a high of around $4.20
See this link for more on the mergerhttps://www.aussiestockforums.com/forums/showthread.php?p=245112#post245112
As I mentioned in the MFS thread, as a result of this merger deal, MFS shareholders would end up with both MFS and CIY shares. CIY will be a property funds management company and MFS will keep stella, which is a travel business. If Flight centre's PE is anything to go off then the future for stella looks very good.

Obviously there is much more pros to this merger that I could delve into (apart from potentially attracting another party to the bidding table) but I think that the above says enough for now.

So post up the stocks that you have your eye on but remember to provide a reason as to why you think they are good value.

Cheers

DYOR

Just wondering so how much do you think MFS should be worth atm?

BKN appears to be good value currently, mainly because of the big price fall recently.

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 45.8 55.3 64.9 73.2
DPS 31.5 37.6 44.0 49.0

thx

MS

 

[Joe Blow]

So post up the stocks that you have your eye on but remember to provide a reason as to why you think they are good value.

I urge everyone to take notice of this sentence in The Mint Man's original post.

Reasons must be given as to why you believe a stock is 'good value'.

Posts that do not meet this qualification will be removed.

Thank you for your co-operation.

 

[The Mint Man]

Re: Good value stocks, post em up.

Just wondering so how much do you think MFS should be worth atm?

BKN appears to be good value currently, mainly because of the big price fall recently.

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 45.8 55.3 64.9 73.2
DPS 31.5 37.6 44.0 49.0

thx

MS

Well I'm not about to get into a debate over what any stock is worth ATM, worth and what the market pays are two different things. However I do think that MFS is good value at the moment. I suppose the easiest way to come up with a figure though is to look at what CIY is offering, even based on CIY's price today ($3.51) MFS seems undervalued. yeh?

Cheers

 

[ROE]

WWA

Earnings(cents) 6.1 6.4 6.6 8.1 6.9 7.9 9.0 13.6 18.3
Return on capital(%) 25 64 45 29 23 24 25 37 42
Return on equity(%) 69.2 56.6 39.4 39.5 30.3 30.6 30.2 36.0 41.6

Forecast EPS
EPS 18.3 25.8 29.7 32.2


The figure speak for itself, Steadily increase EPS for the last 10 years.
Amazing ROE/ROC and absolute no debt...ZIP...ZERO..not a cent

that the sort of company I like and since discover it while doing research for CPR , I decided to go for load up WWA instead of CPR

 

[So_Cynical]

PPT - PERPETUAL LIMITED

SP has fallen about 28% in the last 6 or so months and i doubt very much if earnings will fall by that
much, PTT are major share holders in many top 300 Australian company's and get substantial dividends
from those holdings.

PPT is a major Fund Manager with funds under management of around $37.2 billion...and a Market cap
of 2.5 billion...closed today at 60.00

Big divided payer, at 2 and a half year lows...gota be value.

Not Ramping as i don't Hold any..just had them on a watch list for 6 months and seen the SP continually
falling...i reckon that some time soon they will find bottom and just must be good Value.

 

[reece55]

So Cynical.... I would still be wary of PPT, it had been overvalued for some time in my opinion and now is coming back to fair value, not a bargain yet... Plus, it has exposure to sub prime in a few interest yielding funds and has experienced slower growth in FUM and isn't performing as well as it has in the past.....

MS, I am with you here....... at a forward P/E of 12 with robust financials, the BKN sell down does appear to be now overdone..... FY forecast is 15% EPS growth for 08, yes slower than in the past, but still robust. The caveat I would place is that momentum wise, it is really in the doldrums...... but a patient investor would be able to make some money out of it......


However, I think most of the good value stocks are actually out of Australia - in my view, we are still expensive valuation wise, and the defensive stocks are wayyyyy overvalued (look at WOW, a forward pe of 32 for a retailer.... hrmmm..... can it keep up the momentum, I don't think so). Put it to you way, you can buy AT&T in the states at a P/E of 6, with a dividend yield of 14% - still think telstra's a bargain?

Cheers

 

[mishu]

Huntley's rated this share as worth 3.55 recently with 1.69 of that being from the Southern mining operations. Sure they have had a production downgrade related to the Southern mine (mining lower quality ore) but that is not the equivalent of almost shutting down the Southern operations. They have also made profit selling their stake in Herald, have found a good easily minable copper resource, started shipment of high quality zinc containing ore from Beltana this quarter, and are increasing their Northern mining operations.

There is also a recent upgrade to buy from UBS.

Source FN Arena Broker Call Headlines - 11 Jan 2008
Sunday Jan 13 10:30 AEDT

"- PERILYA LIMITED

UBS rates as Upgrade to Buy from Neutral - The broker has lowered its target price to $3.05 from $3.35 after downgrading FY08 net profit by 48% and FY09 by 18%. This comes after factoring in the company?s weaker production guidance and lower short-term zinc prices into its valuation. UBS has, however, upgraded the rating to Buy from Neutral as it believes that much of the risk with Broken Hill?s operating performance has been priced into the share price. ... "

 

[mishu]

This is more about the North Mines deeps resource. It is a little old- December 2007, and talks about if it will be redeveloped. Since then it has been announced that the Deeps is going to be further mined/developed.


"Re-opening the deep workings of the North Mine, which were mothballed in 1993, would not only access a rich resource in the deeps but may lead to the development of the deeper Fitzpatrick Lode which had been started in the late 1980s to provide longevity for the field.

Perilya's chief executive, Len Jubber, said the potential extension of the existing North Mine would not only extend Broken Hill's mining life but also reduce the dependence on the Southern Operations.

A pre-feasibility study showed that the North Mine Deeps had a mineral resource of 3.7 million tonnes grading 11.3% zinc, 13.5% lead and 219 grams/tonne silver. This resource extends to 1,800 metres and will be accessed by extension of the existing underground decline to level 12 (450m), while dewatering of the mine below level 22 (860m) will be carried out via the No 3 Shaft that extends to 1,580m.

Prior to closing in 1993 North Mine operated to 1,750m with ore hoisting through No 3 shaft. Perilya re-started mining via a decline from the bottom of the open pit with mining restricted to the inner boundaries of the two ore lenses. The company also has a multi million dollar exploration quest on licences within a 10 kilometre radius of Broken Hill.

Perilya is probing for new leads on the Line of Lode and is developing a decline mine on the Potosi lease, north of the city."

http://www.mineweb.co.za/mineweb/view/mineweb/en/page36?oid=42482&sn=Detail

 

[The Mint Man]

Well guys, you wont be able to get into MFS now as they are in a trading halt till Friday. See their Ann out today for more info.

Cheers

 

[TheRage]

ROE I am keeping an eye on Wridgeways, still not quite at my buy in price but fundamentally and interesting stock.


My value pick is Credit Corp.
2004 2005 2006 2007 2008
Amortisation of Goodwill 0.3 0.3 0.0 0.0 0.0
Abnormal Gains (Loss) 0.0 -3.5 -0.8 0.5 0.0
Net Profit inc. Abnormals less Pref Divs 5.4 8.2 14.4 19.6 18.0
Dividends on Ordinary Shares Only 2.2 3.5 5.6 8.7 8.0
% of Dividends Franked 100% 100% 100% 100% 100%
Grossed up Dividends 3.1 5.0 8.0 12.4 11.4
Opening Equity 13.0 20.9 22.9 42.7 66.1
Retained Profits 3.2 4.7 8.8 10.9 10.0
Change in Reserves -0.1 -3.5 -0.7 0.7 0.0
New Ordinary Share Capital 4.8 0.8 11.7 11.8 0.0
Ordinary Capital Buybacks 0.0 0.0 0.0 0.0 0.0 0.0
Closing Ord. Equity Ex Minorities 13.0 20.9 22.9 42.7 66.1 76.1
Normalised IRR Cash Flows -13.0 -1.7 4.2 -3.7 0.6 91.9
Normalised Earnings 6.5 10.0 16.9 23.5 21.4
Normalised ROE 42.5% 46.9% 58.8% 48.4% 32.4%

Share holder equity has been growing at a nice rate and ROE has been preserved during this growth. Recent share price weakness is due to management announcing flat earnings growth for 2008 due to increase cost in training new staff and also due to restructuring of debt product. Staff training cost expected to flatten out as staff become more productive at end of 2008. Credit Corp is growing very fast and cost of labor is always a challenge. The only question mark for me on CCP is borrowings. Non current liabilities around $120 million which at around 8% interest rate is around 9.6 million interest expense which represents half of net profit. Put it like this with a net profit of 20 million it would take 6 years to clear debt if no further reinvestment or dividends were paid and if the companies growth remained static. I generally like this number to be around 2-3 years but I do understand financial companies can be more leveraged. However in our present interest rate environment and lack of funding I will also err on the side of caution when it comes to Debt and the ability to finance it.

DYOR

 

[ROE]

I like CCP too but with the profit downgrade and management stuff going on
I'm nervous so I leave it be. Experience tell me when there is one problem, there are more to surface.

At least with WWA, top company still run by the guys that has the most to benefit from the company with 11.5% stake so he wont do anything stupid that
affect its earning and I very much like their conservative approach, they don't take on debt unless ABSOLUTELY necessary hence a debt free book.
and once they take on debt they quickly pay it off, top stuff

Just like me and my mortgage, take them on get them out of the way in 5-10 years and don't worry about interest rate

I'm in for the long hall so don't care too much if I pay a few cents more for a stock . I learn my lesson from Phillip Fisher ..common stock uncommon profit .. Once you identify a good business and want to buy don't skim on a few cents worth
because it could cost you a whole lot more in the long run waiting on the side line

 

[blaze87]

ROE I am keeping an eye on Wridgeways, still not quite at my buy in price but fundamentally and interesting stock.


My value pick is Credit Corp.
2004 2005 2006 2007 2008
Amortisation of Goodwill 0.3 0.3 0.0 0.0 0.0
Abnormal Gains (Loss) 0.0 -3.5 -0.8 0.5 0.0
Net Profit inc. Abnormals less Pref Divs 5.4 8.2 14.4 19.6 18.0
Dividends on Ordinary Shares Only 2.2 3.5 5.6 8.7 8.0
% of Dividends Franked 100% 100% 100% 100% 100%
Grossed up Dividends 3.1 5.0 8.0 12.4 11.4
Opening Equity 13.0 20.9 22.9 42.7 66.1
Retained Profits 3.2 4.7 8.8 10.9 10.0
Change in Reserves -0.1 -3.5 -0.7 0.7 0.0
New Ordinary Share Capital 4.8 0.8 11.7 11.8 0.0
Ordinary Capital Buybacks 0.0 0.0 0.0 0.0 0.0 0.0
Closing Ord. Equity Ex Minorities 13.0 20.9 22.9 42.7 66.1 76.1
Normalised IRR Cash Flows -13.0 -1.7 4.2 -3.7 0.6 91.9
Normalised Earnings 6.5 10.0 16.9 23.5 21.4
Normalised ROE 42.5% 46.9% 58.8% 48.4% 32.4%

the rage, this is a very good summary. Did u do it urself, or is there a website that u got it off? if it is a website, mind telling me which 1 is it?
thanks

 

[TheRage]

Hi Blaze,

I have my analysis at home but I borrowed the data from StockVal as I am at work.

I have my own predifned criteria for determining what a good business is using a spreadsheet that works on 10 yr data on items such as Net profit margin, operating margin, sales growth and debt. Once I like a particular business I put it on my watch list then use Stock Val to determine whether the stock is cheap or dear. If there is suffcient margin of safety i.e 20% discount to market I might decide to buy the stock. My margin of safety depends on the type of business and how much of the stock is owned by 20% of shareholders. For instance low liquidity low risk stocks such as BKL (70% of shares owned by 20 shareholders) provide very few opportunities to buy the stock at a discount so I try to buy them at intrinsic value if I can. I don't buy a stock purely becasue Stock Val tells me it is cheap. Some businesses fall well below intrinsic value for very good reason. It is one of my tools.

By the way If I have broken any copy right by supplying this data I will retract it immediately.

 

[TheRage]

II learn my lesson from Phillip Fisher ..common stock uncommon profit .. Once you identify a good business and want to buy don't skim on a few cents worth
because it could cost you a whole lot more in the long run waiting on the side line

I completely agree with you on this point but only on a very few business do I act this way. Usually tightly held stocks with very tight range of Sp movement. However I still try to buy them at Intrinsic value or very close to it if I can. Ususally this only occurs when the market in general is correcting as we are experiencing now.

 

[ROE]

WWA lesson I applied about saving on a few cents on a stock certainly comes true ..

Just release.

Growth Continuing for Wridgways
· Net Profit after Tax forecast to increase by 20 – 25% for the half year
ended 31 December 2007
Australia’s only publicly listed relocations company, Wridgways Australia Limited,
is forecasting an impressive increase in profit after tax of 20 – 25% for the half
year to 31 December 2007, compared to the half year to December 2006. This is
an excellent result and consolidates the ongoing growth in the business.
The buoyant resource sector and demand for skilled professionals continues to
drive high mobility activity within Australia as well as strong business and private
migration into Australia.
Wridgways is due to formally announce its audited half year result on 21
February 2008. Further details will be released at that time.

 

[ROE]

the rage, this is a very good summary. Did u do it urself, or is there a website that u got it off? if it is a website, mind telling me which 1 is it?
thanks

Most of these data you can get from comsec or similar with a bit of digging.
like EPS - Dividend = Retained earning etc..

 

[dhukka]

I like CCP too but with the profit downgrade and management stuff going on
I'm nervous so I leave it be. Experience tell me when there is one problem, there are more to surface.

At least with WWA, top company still run by the guys that has the most to benefit from the company with 11.5% stake so he wont do anything stupid that
affect its earning and I very much like their conservative approach, they don't take on debt unless ABSOLUTELY necessary hence a debt free book.
and once they take on debt they quickly pay it off, top stuff

Just like me and my mortgage, take them on get them out of the way in 5-10 years and don't worry about interest rate

I'm in for the long hall so don't care too much if I pay a few cents more for a stock . I learn my lesson from Phillip Fisher ..common stock uncommon profit .. Once you identify a good business and want to buy don't skim on a few cents worth
because it could cost you a whole lot more in the long run waiting on the side line

I am eyeing CCP very closely too. It has been absolutely pummeled since the profit downgrade. However I don't feel the need to wade in and be a hero just yet. I'm happy to wait and until the half yearly next month and see if they stick to their full year forecasts and have put their personnel issues behind them.

 

[visual]

Joe if I put up a list of my stocks which as of now are looking decidedly 'Oh God' and everyone buys into them so that I can get out would that be out of order or even ramping!:

 

[Nyden]

Joe if I put up a list of my stocks which as of now are looking decidedly 'Oh God' and everyone buys into them so that I can get out would that be out of order or even ramping!:

Ha! me first! : Only kidding, I'm not that troubled.

Is it just me, or is a whole lot of down-ramping being allowed? I understand that the market is going down / probably due for further losses; but the way people are posting "price targets" without any explanation other than "the world is ending!!!111" just seems inappropriate.