|
Stock Pick - 28 May 2010 |
Stock Pick: Old Mutual [1253] BHP Billiton [21123] MTN [10655]
>>> Transcript Not Playing?
More Stock Pick Videos
|
Transcript:
Giulietta Talevi: Paul, I know you’ve got three stocks you wanted to pick - tell us why you are looking at Old Mutual, BHP Billiton and Standard Bank?
Paul Hansen: The third one is MTN. Old Mutual is trading today where it was 11 years ago basically where it went public in 1999 in rand terms and it’s about 9% lower in pound terms than it was 11 years ago…
Giulietta Talevi: In other words it was a very bad investment?
Paul Hansen: Exactly. But I think there is a sense that it’s just starting to outperform the London Stock Exchange in pounds and showing possibly signs of wanting to do that on our market although not quite yet. The share is at about a 30% to 40% discount to embedded value and there is a fair chance that the chief executive will continue with the restructuring and there could be a possible sale of Nedbank. It’s looking like good value here… BHP Billiton is on a forward PE now of more than about eight times. There's been a lot of negativity because of the Australian tax that may be watered down a bit - also because of the fall in copper and oil prices - but I think that’s now happened and it’s turning upwards a bit so it’s looking good value here. It’s fallen quite a bit from R260 to around R212…
Giulietta Talevi: It fell further to below R200 a share so unlucky if you didn’t pick it up there - but it could go back there. What about MTN?
Paul Hansen: A lot of bad news is in the MTN price. It’s been to R160 and at around R106 it’s looking good value. It’s the type of company along with Vodacom that’s becoming more of a cash cow - the heady growth days are gone but it’s starting to generate more cash that more mature companies typically do so it should be able to increase dividends very nicely in the next few years and pay down debt, generate good cash glows and there is always the possibility of corporate action.
Giulietta Talevi: So you’d be buying a company like MTN now because of the cash that you’d be getting out of it rather than the growth prospects attached to it…
Paul Hansen: More so yes, although it’s quite cheap now on a forward PE now of more than about 10 but correct the cash dividends would be big.
Broker:
Paul Hansen, Director of Stanlib
Email video link
Click here to license this clip
|
|
|
|
|
|
Summit Television, a division of the African Business Channel (Pty) Limited, disclaims all liability for any loss,
damage, injury or expense however caused, arising from the use of or reliance upon, in any manner,
the information provided through this service and does not warrant the truth,
accuracy or
completeness of the information provided. � Summit Television 2009.
Use of our web site material in any form is prohibited without writtten permission. Usage requests: webadmin@summit.co.za |
Home