Collected Wisdom

This week’s roundup of the investment newsletters.
Fat Prophets

The research team at Fat Prophets are clearly in a forgiving mode this week as the publication offers a positive review of Lihir Gold.

The PNG gold miner, which recently received a range of hostile reviews for its controversial takeover of Ballarat Gold, is rated a buy. Fat Prophets says: “We are more than comfortable with the Ballarat acquisition; we believe it is time to gain exposure to Lihir. The merger will see Lihir emerge as one of the world's largest gold producers with a market capitalisation of more than $4 billion."

The buy call from Fat Prophets was made at $2.75; the stock is currently trading about $2.73.

Fat Prophets also shines a fresh light on Salmat, the one-time market darling that has encountered a range of trading problems in recent years.

Salmat shares are recovering from a 12-month slump and, according to Fat Prophets: "Several key factors form the basis of a positive view including a successful business and management, inexpensive valuation, diversified revenues, growth prospects and a healthy dividend yield (of 5%). Buy Salmat at around $3.36; the stock is currently trading at 3.42.

While upgrading some former strugglers, Fat Prophets believes the highly successful financial services group Australian Wealth Management has had its run for the moment. "As an integrated financial services company AUW has strengthened its position considerably over the last year '¦ we believe there is a possibility of some near-term consolidation below resistance at $2.67." The team indicate $1.95 would be the bottom line support price for the stock. Hold at $2.68; the stock is currently trading at $2.68.

Huntley’s Your Money Weekly

The Huntley’s team are also in a generous mood, revisiting troubled oil company Santos and declaring it a buy following its recent bid for Queensland Gas. “Higher energy prices have boosted earnings and it is hoped production growth can continue the trend," Huntley’s says.

All the same, the team are careful to mark Santos as a more speculative call that arch-rival Woodside: "High-risk exploration under managing director John Ellice-Flint breathed new life into the share price. The requirement for a new cornerstone asset sees Santos a higher-risk, lower-quality proposition than rival Woodside. Huntley's tagged Santos a “buy” at $10.73; the stock is currently trading at about $10.70.

In keeping with the “unloved and overlooked” theme common to newsletters this week, AXA is also in the sights of Huntley’s, - the team calls AXA an accumulate at $6.50; it is currently trading around $6.51.

Huntley's applies the deductive argument that AXA, in common with AMP, will be a long-term beneficiary of the mandated flow of new funds into superannuation, but adds the tasty prospect of a renewed bid from the company from its Paris-based parent company.

However, the team's bullish mood does not extend to Westpac, where long-time chief executive David Morgan delivered a subdued $3 billion annual profit last week. Citing margin deterioration as a key factor at the bank, despite an improving payout ratio on the stock. Huntley's says Westpac is a hold at $23.76; it is trading at about $23.93.

Rivkin Report

With only a few days until Thursday’s close of the T3 share offer, the Rivkin Report gives the Telstra issue one last buy recommendation. Suggesting investors are up for an “easy 10–20% return”, the report says T3 ($2) remains a strong buy.

Otherwise it's very much a holding pattern at Rivkin Report. Despite new dynamics around BHP Billiton and Rio Tinto (click here) the report soberly has both of the giant mining stocks on hold.

With a rate rise this week almost certain the report has also put the majority of stocks in the retail sector on hold. However, the report is clearly excited about the untapped potential at Allco Finance Group, the finance house led by former Packer lieutenant Peter Yates.

“We believe there is further upside in Allco, although it may take the release of the first-half results (2007) early next year to see this upside captured in the share price. We do not see any obvious near-term catalyst for the stock to rally, but advise to hold up to $11.27; the stock is currently trading at around $10.95.

The Speculator

The highly speculative portfolio held by The Bulletin's David Haselhurst continues to outperform. This week the veteran stock picker takes one of his rare trips outside the junior mining league to recommend a “high-tech aerospace” company, Quickstep Holdings, which has a market capitalisation of about $70 million. Quickstep, which has developed high-speed technology for advanced materials manufacturing, is tagged as a buy at 52.5¢; the stock is currently trading about 62¢.