INVESTMENT PICKS FROM HLB MANN JUDD

Written on the 8 March 2012

INVESTMENT PICKS FROM HLB MANN JUDD

CLOUDS of uncertainty are looming over the European and Chinese economies, but one financial adviser does not predict a disastrous year for Australia.

The domestic market could worsen if Europe fails to curb its debt crisis by mid-year, however, HLB Mann Judd director Andrew Buchan (pictured) believes there is still a lot to be positive about.

“The yield on stocks is pretty strong at 5 to 7 per cent. IT company Data#3 is managed well by John Grant, has nil or hardly any debt and recently carried out a share split giving 10 for every single unit owned,” he says.

“Engineering consulting company Cardno is also led well by Andrew Buckley, operating in a good niche and producing quite a good yield. Alliance Aviation Services listed late last year at a $1.60 and is doing well at $1.90, while Blue Sky Alternative Investments is a speculative find and will be interesting to watch.”

Interest rates are falling and returns on term deposits are smaller, with the average deposit interest rate being 5 per cent. Buchan views commercial property investment as a better prospect.

“You can pick up commercial property with pretty good yields of 7 to 9 per cent in industrial areas like Eagle Farm, West End, Douglas Street in Milton, Bulimba, Sumner Park and along the Gold Coast corridor. It is worthwhile investing if there is already a tenant on a long-term lease but the owner is looking to sell,” he says.

“We are keen on convenience centres with good multi-national tenants like Woolworths. You would want it leased out before buying. If it is due to develop with long-term leases you cannot go wrong. I would also not rule out business purchases from business owners via superannuation.”

Ipswich is becoming a growth hot spot with construction expanding to Springfield and the Ripley Valley. However, Buchan advises against investing in residential property for short-term gains.

“Residential property is okay if close to the city but yields are a bit low at 3 to 4 per cent before expenses. It is not our preferred vehicle because it does not produce much income,” he says.

“You do not want to invest in things and cross your fingers that it will grow and not cause loss of income.”

He also emphasises the importance of paying down debt, ensuring superannuation is appropriately invested and having income protection insurance.

“Our greatest asset is the ability to earn income and be appropriately insured,” says Buchan.

 

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