Stocks best placed to survive and prosper?

[Pager]

Just wondering what thoughts people have as to which stocks or sectors will survive and prosper in the current climate.

Banks seem to high risk, resources are falling in a heap, so were does one look for value ?, with the falling $A are company's with offshore earnings like Brambles going to be better value, maybe food and essential everyday company's like Woolworth's or even Telstra.

Maybe its not a case of looking for gain but were the lowest risk may be ?.

Sitting on cash with a plunging dollar may not be the best option IMO.

 

[prawn_86]

Re: Stocks best placed to survive and prosper ?

At the moment i am pumping as much as i can into my savings account, and am now looking to purchase some solid blue chip stocks that are oversold in my opinion, with a 5yr minimum timeframe. I will be looking at starting to enter within the next month (depending on macro factors).

I am looking for stocks that have a solid history of growth, preferably over the last 10yrs as that takes into account the bad years in 01 - 02.

They need a debt cover ratio over 90%, but preferably over 100%.

Looking for div yield >5% but it has to be a sustainable yield, which brings us back to my first point.

Two i am liking the look of at the moment are AMP and FLT however it is preliminary research.

 

[sammy84]

I dont think you can look past NAB at the moment. Good dividend yield, have conducted most of their write-downs, very over sold and the government guarantee has meant there has been a flood of cash coming to it in recent times.

 

[skyQuake]

I dont think you can look past NAB at the moment. Good dividend yield, have conducted most of their write-downs, very over sold and the government guarantee has meant there has been a flood of cash coming to it in recent times.

I like our banks, but not NAB. Their 'shock loss' in off balance sheet conduits has really rocked my confidence in them.
Then again, the Big 4 in Aus still have top credit rating.

 

[Joe Blow]

Ladies and Gents:

If you are going to nominate particular stocks in this thread can you please give a short explanation detailing why you believe they are well placed "to survive and prosper".

Thank you!

 

[ROE]

Re: Stocks best placed to survive and prosper ?

They need a debt cover ratio over 90%, but preferably over 100%.

you got to be joking right interest cover at 1x time, that a disaster waiting to happen

try interest cover 400% or more in this climate, I prefer 5-8 times

I wont bother with the stocks, I just mentioned sectors in general

Gambling sector (Aussie love to have a punt right, Melbourne cup, rugby world cup, casino that provide entertainment and get you try their pokers and gambling table )

General every day food and merchandise (we all need to eat and brush)

Removalist sector (Gen Y don't stay in one place long and we move on average once every 7 years, and my place of work keep getting move once every 12 months for no damn reason )

sound odds right now but company that manage Australian supers
9% keep coming in every month some of that will go to the share market and property trust.

and oh there's Australia government bonds that provide ultimate safety
and pay 7.5% for one year and 6.5% for 5 years

 

[prawn_86]

Re: Stocks best placed to survive and prosper ?

you got to be joking right interest cover at 1x time, that a disaster waiting to happen

try interest cover 400% or more in this climate, I prefer 5-8 times

Hmm, maybe i worded it wrong, or i have just made up some random ratio in my spreadsheet

Interest cover is calculated as: EBIT/Interest expense. And your right saying that it needs to be over 4 (roughly) and the higher the better.

The ratio i was talking about is calculated as: total assets/total liabilities. So therefore anything over 100 means they have more assets than liabilities. DOes anyone know the proper name for this ratio? Is it even a real ratio?


EDIT: Found it. And funnily enough its called the assets:liabilities ratio

 

[dhukka]

Re: Stocks best placed to survive and prosper ?

General every day food and merchandise (we all need to eat and brush)

I like TRS for this reason, they will pick up consumers trading down looking for lower prices. They haven't overbuilt their stores, all in good locations. Yield is decent at over 5%, although I still think they could get cheaper from here. I think the retail sector has not fully discounted a recession yet.

 

[So_Cynical]

Power and energy in general...the lights aint gona go out, and people
mite drive less but they will drive.

 

[white_goodman]

BHP may be a play if it gets sold off even more... circa $18 ish....


ACCC approval for merger with RIO...

 

[Muschu]

I disclose that I hold NVT. I make no recommendation other than suggesting a look at their chart and reports since the turmoil began. There is also a brief reference to them in the November [Yes, it's still October] of the Smart Investor in an articlt titled "Stocks Set To Benefit From the Falling Dollar". There have been similar articles elsewhere but I don't have the references to hand.

 

[treefrog]

I disclose that I hold NVT. I make no recommendation other than suggesting a look at their chart and reports since the turmoil began. There is also a brief reference to them in the November [Yes, it's still October] of the Smart Investor in an articlt titled "Stocks Set To Benefit From the Falling Dollar". There have been similar articles elsewhere but I don't have the references to hand.

nice cashflow rick but heck, with a QuickRatio of 0.28 wouldn't want to stumble - very low for a divvy paying stock.
and book value of 27c for a 214c share in current market?

 

[son of baglimit]

i have to disagree with the gambling sector - i agree folk will still punt, but their margins are being eroded by players on the internet, who can & will go seeking whatever margin or incentive offered by NT bookmakers etc.
the gambling dollar keeps increasing, but is starting to spread out, and the giants of the industry are beginning to hurt. and governments love to hurt these guys, cos its a politically correct win for them.

as far as positives, i remain loyal to mining services, or more specifically energy services, as in the short term the clean energy groups have had to shut down everything.

 

[sammy84]

I like our banks, but not NAB. Their 'shock loss' in off balance sheet conduits has really rocked my confidence in them.
Then again, the Big 4 in Aus still have top credit rating.

That's very true. I guess its just that CBA and Westpac were so well insulated from these toxic assets, so I believe they haven't been oversold enough to make them a great bargain for 5 years for now. I dont like ANZ much either as they seem to go only prosper when the economy prospers.

 

[sammy84]

Also what do people think of Lend Lease? Their price is looking very tempting at the moment. They seem to be well diversified, have low debt levels, good management, good dividend yield and a guaranteed income from the 2012 Olympics construction.

 

[rub92me]

In the mining sector I'm looking at companies that mine locally, have a healthy cash position and that are properly hedged in the commodities they produce. We're entering the survival of the fittest stage now for many Nickel, Copper and Zinc producers for instance. Sure, demand is likely to continue to go down in the short term, but this could be outstripped by supply destruction that is now well underway through miners pulling up sticks or mothballing operations. An example of a company I think will do well for the medium to long term based on the above is PAN: a well hedged Nickel producer with current market cap close to their cash and hedge backing. Recent slide in the Aussie dollar has improved their position even more.

 

[nunthewiser]

In the mining sector I'm looking at companies that mine locally, have a healthy cash position and that are properly hedged in the commodities they produce. We're entering the survival of the fittest stage now for many Nickel, Copper and Zinc producers for instance. Sure, demand is likely to continue to go down in the short term, but this could be outstripped by supply destruction that is now well underway through miners pulling up sticks or mothballing operations. An example of a company I think will do well for the medium to long term based on the above is PAN: a well hedged Nickel producer with current market cap close to their cash and hedge backing. Recent slide in the Aussie dollar has improved their position even more.

re pan .production cost per lb/tonne ?

thankyou

 

[skc]

Re: Stocks best placed to survive and prosper ?

The ratio i was talking about is calculated as: total assets/total liabilities. So therefore anything over 100 means they have more assets than liabilities. DOes anyone know the proper name for this ratio? Is it even a real ratio?

EDIT: Found it. And funnily enough its called the assets:liabilities ratio

Are you sure that is the right ratio to look at (or that it is interpreted correctly)? On a company's balance sheet, Asset = Liabilities + Owner's Equity. Therefore Asset / Liability should always be over 100, otherwise the company has zero or negative owner's equity which doesn't really inspire confidence.

There are several stocks that I think will survive and prosper:

IVC - Invocare. In the death business, with the aging population being the key driver (Not sure whether there are research suggesting people spend less on funerals in times of recession, however).

CSL - Global leader in what they do (blood plasma and stuff). Good track record. Relatively recession-proof. Will benefit from the falling $A.

MTS - Metcash. Grocery wholesaler. Consumer stable sector. Share price held up well in recent turmoil.

CLH - Collection House. Classic text book example for counter cyclical sector. Recession means boom time for debt collectors .

I have no direct interest in any of these stocks.
I am not a financial adviser
and please, do your own research...

 

[Big_Daz]

I read a study not too long ago about the best stocks to hold during a recession, it found that ALCOHOL, GAMBLING & SMOKES were the main beneficiaries in terms of consumption during this time.

did anyne else manage to read this article? It was in one of the overseas press...US. I'd agree with the first two...from experience.

 

[Glen48]

I thought the third one was drugs Anti-depressents