By ELLEN READ
The pressure is on Fletcher Building to perform over coming months. The company is by far the most popular with brokers picking what they expect to be this year's top stocks.
Of the 10 broking firms that gave their top five picks for this year to the Business
Herald, six chose Fletcher Building.
Their reasons include an expected strong performance from the building sector this year, a positive reception to further sales of the firm's non-core assets - especially those in South America - and a high regard for chief executive Ralph Waters.
A management focus on restructuring and reducing costs means Fletcher Building can continue to be re-rated this year, Direct Broking says.
Other popular choices were Waste Management, Nuplex and Sir Ron Brierley's investment vehicle, Guinness Peat Group.
Waste Management was seen by Gary Baker of AS with good prospects.
Forsyth Barr head of research Rob Mercer said the Redvale Landfill was the key value-driver for Waste Management and that volume and price increases should help the firm lift its financial 2002 and 2003 year earnings by over 15 per cent in each year.
Nuplex was viewed as another beneficiary of the expected strong building sector performance and the expected upturn in cyclical stocks.
Guinness Peat had an impressive track record of increasing asset value and the company's management was seen continuing to deliver.
The $250 million raised from a convertible notes issue last winter would also enable the firm to take up further opportunities, Direct Broking's Brett Wilkinson said.
Shunning the common ground, DF Mainland went out on a limb with its choices of Burns Philp, Goodman Fielder, Bligh Oil & Minerals, eVentures and Genesis Research & Development.
Chief executive John White said earnings at New Zealand-controlled Burns Philp would surprise.
Oil explorer and producer Bligh Oil would perform well because of its significant Taranaki drilling programme now underway and 10 other wells to be drilled internationally this year.
Although ASX-listed Bligh does not meet the Herald's requirement that all selections be traded on the New Zealand Stock Exchange, the company has a New Zealand unit, so we will accept them.
Mr White said eVentures was sitting on cash equivalent to 32 cents a share and was controlled by Craig Heatley, an entrepreneur with a proven track record.
DF Mainland picked Genesis because there would be a global bio-tech sector re-rating this year with significant corporate activity likely. Mr White said Genesis was well-funded. It had $47 million in the bank, and an excellent research and development product pipeline.
Also taking a punt was CS First Boston. In choosing troubled Force Corporation, it must be a big believer in company turnarounds.
Research analyst Brian Stewart said the company was its higher risk/higher return selection.
Macquarie Equities' Arthur Lim said his firm looked for stocks that were undervalued by the market, with potential for economic revival over the year to drive earnings higher, and where further restructuring of the chosen companies would release value.
Macquarie picked Telecom, Tranz Rail, F&P Appliances, Fletcher Building and Rubicon.
A word of caution before the stampede to invest in the brokers' chosen companies begins: all of them mentioned, when submitting their picks, that making recommendations that were expected to last an entire year without being updated was a risky business.
Brokers' picks (finalised on December 21, 2001)
ABN Amro:
Auckland Airport
Fletcher Building
Natural Gas Corp
Tower
Mainfreight
ASB Securities:
Waste Management
Fletcher Building
Nuplex Industries
Natural Gas Corp
Guinness Peat Group
ABN Amro Craigs:
Auckland Airport
Fletcher Building
Natural Gas Corp
Tower
Mainfreight
CS First Boston:
Briscoe Group
Guinness Peat Group
Nuplex Industries
Sky Network TV
Force Corporation
DF Mainland:
Burns Philp
Goodman Fielder
Bligh Oil
eVentures
Genesis Research
Direct Broking:
Fletcher Building
The Warehouse
Telecom
RMG
Guinness Peat Group
Forsyth Barr:
Telecom
Waste Management
F& P Appliances
Sky Network TV
Pacific Retail Group
JBWere:
Nuplex Industries
INL
Fletcher Building
Waste Management
Guinness Peat Group
Macquarie Equities:
Telecom
Tranz Rail
F& P Appliances
Fletcher Building
Rubicon
UBS Warburg:
F& P Appliances
F& P Healthcare
Fletcher Building
Nuplex Industries
Waste Management
Fletcher Building top pick for 2002
By ELLEN READ
The pressure is on Fletcher Building to perform over coming months. The company is by far the most popular with brokers picking what they expect to be this year's top stocks.
Of the 10 broking firms that gave their top five picks for this year to the Business
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