Investment: Ten to watch while you wait

In the final part of our series on investment, Mark Lister looks at 10 stocks to consider while you wait for Mighty River

Auckland International Airport offers growth opportunities over the next 10 years, says Mark Lister. Photo / Martin Sykes
Auckland International Airport offers growth opportunities over the next 10 years, says Mark Lister. Photo / Martin Sykes

Last week the Government announced that it will proceed with an initial public offering (IPO) of up to 49 per cent of Mighty River Power between March and June 2013, rather than later this year.

In its statement, the Government noted that although its preference would have been for a share offer for Mighty River Power this year, the revised timeframe for the IPO does not alter its commitment to providing investment opportunities to New Zealanders through its share offer programme.

For investors who are interested in the broader industry in which Mighty River Power operates, I have outlined 10 listed companies (five in New Zealand and five in Australia) that are in the utilities and infrastructure sectors.

Looking back at how these 10 have performed over the last decade, including through the global financial crisis, the returns to investors speak for themselves.

VECTOR

Multi-network infrastructure company that owns and operates a range of energy and technology businesses and assets. Vector represents an excellent defensive exposure to the infrastructure sector, with strong cash flows, an attractive dividend yield and low-volatility earnings characteristics.

TRUSTPOWER

Over the past decade, TrustPower has been the third best performer on the New Zealand sharemarket, having posted a return of 22 per cent per annum. This means that $1 investment 10 years ago is worth $7.36 today. This track record is surpassed only by two other excellent local companies - Ryman Healthcare (having delivered a 10 year return of 30 per cent per annum) and Mainfreight (28.4 per cent per annum).

CONTACT ENERGY

New Zealand's largest electricity retailer has been a disappointing performer over recent years for investors and people still remember the public relations fallout from its director fee increase debacle in 2008. However, significant progress has been made over the last 12 months.

AUCKLAND AIRPORT

Auckland International Airport is New Zealand's biggest airport both by passenger and aircraft movements. It accounts for around 70 per cent of all inbound passengers to New Zealand and the company also owns a 25 per cent stake in Cairns and Mackay Airports in Australia, as well as in Queenstown Airport. Asia (in particularly China and India) offers growth opportunities over the next decade.

PORT OF TAURANGA

Port of Tauranga's extensive land-bank, operational efficiency, excellent transport (road and rail) connections, balance sheet strength and management expertise provide significant capacity for future growth. The company is a solid long-term investment and as our largest export port, is an attractive exposure to robust commodity prices and a relatively strong economic backdrop.

SPARK INFRASTRUCTURE

An Australian infrastructure fund that holds interests in three electricity distribution businesses (lines companies) serving nearly 1.9 million customers in South Australia and Victoria.

DUET

An Australian listed infrastructure fund holding controlling stakes in three defensive utility assets, giving it exposures to energy transmission and distribution networks in Victoria and Western Australia.

APA GROUP

APA holds an unrivalled position in the Australian gas transmission industry, with interests in almost 12,000 km of natural gas pipeline infrastructure and over 2,800 km of gas distribution networks in Australia. It has a strong portfolio of gas network assets spread geographically across the country, strong cash flow generation, a range of growth options, and is well positioned to take advantage of increasing gas demand in both Queensland and Western Australia.

AGL ENERGY

AGL operates one of Australia's largest retail energy businesses, retailing electricity and gas to over 3.5 million residents and businesses nationally. The company also has investments in upstream gas activities and has assembled Australia's largest privately owned and operated portfolio of renewable assets.

SYDNEY AIRPORT

Australia's primary airport is just 8km from the city centre. Between 2002 and 2010, total passenger traffic increased from 23.9 million passengers to 35.6 million passengers - an increase of 49 per cent. With estimated future passenger growth close to this level, it is a solid long-term investment.

•Mark Lister is head of private wealth research at Craigs Investment Partners, a retail syndicate member for the Mighty River Power share offer. His disclosure statement is available under his profile on www.craigsip.com. This column is general in nature and should not be regarded as specific investment advice.

- NZ Herald

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