ADVISOR WATCHLIST
Michael Burrell
Associate Director Advisor - Individually Managed Portfolios mburrell @ burrell . com . au ( 07 ) 3006 7226
On the sell side I ’ m lightening Iluka ( ILU ) after its announcement that ILU will suspended its operations at its Sierra Rutile mine in Sierra Leone in November and has withdrawn its 2021 production forecast for that business . ILU is meant to be a world leader at mining rutile , and the Sierra Leone mine was meant to lead to substantial growth . My opinion is warning bells are ringing and there are better opportunities elsewhere .
I ’ m still bullish on Amcor ( AMC ) especially after their last update raising EPS to 14-15 %. I am happy for clients to take their holding to 3 % of their portfolio value . Amcor ( AMC ) still looks attractive given its more defensive revenue from packaging . Our research has a price target of $ 16.50 , AMC will pay around a 4.5 % dividend , has a forward PE estimate of 13.9 .
I ’ m also bullish on Carsales ( CAR ) under the $ 20 price targets . The stock retreated recently on the back of a capital raising at $ 17 to help fund a 49 % stake in the US platform Trader Interactive , which predominantly provides US users a platform to buy and sell non-car vehicles such as RVs , Trucks , snowmobiles etc . There is some execution risk , but I see positive themes for CAR continuing as the US continues to open , and as Australians continue to favour driving holidays out of necessity for an extended period .
Lendlease ( LLC ) is also interesting me , however the market has not rewarded the company recently . There is some uncertainty around historical tax issues which is weighing , as well as the obvious COVID constraints on projects across the world . Market commentators are also worried that LLC won ’ t meet guidance without accelerated sales . Notwithstanding these risks the current price looks attractive at low to mid $ 12 ’ s . Price target is mid $ 14 ’ s . In the half year to 31 December 2020 LLC noted in their update ‘ New work secured was $ 4.9 billion up from $ 3.1 billion , with the Australian and European businesses benefitting from social infrastructure activity .’ Additionally gearing was only 12.9 % and LLC has a pipeline of $ 110 billion in projects . Long term the price of LLC will recover , however it is a longer term play given COVID constraints .
Patrick Shannon
Temple and Webster ( TPW ) is an online retailer of furniture , homewares , and other lifestyle products in Australia . TPW is now being shorted at 9.50 %, up from 2 %. This can explain the recent volatility . I think TPW is around for the long term and the short positions will be squeezed at some point . I believe this area of retail spending is strongly correlated to Australia ’ s booming housing market , which has seen an abundance of first home buyers . I expect this area of retail spending to remain strong on this basis for the next 1 to 2 years . The company reported strong repeat customer numbers and effective marketing ( TV ads ) results in its 1H result presentation .
Designated Trading Representative Advisor – Equities PShannon @ burrell . com . au ( 07 ) 3006 7243
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