INVESTOR PICKS: WILSON HTM
Written on the 1 February 2011
The ASX responded positively when Julia Gillard became Prime Minister, but no matter what happens at home there will always be global flare-ups that affect prices. The European Union will unlikely allow its struggling economies to hit the wall, but with so much volatility it makes sense to buy shares with solid fundamentals. Wilson HTM investment adviser Mark Connors tells Brisbane Business News about three Queensland companies that fit the bill, with upward price movements on the cards.
Retail Food Group (RFG)
This Gold Coast-based retail food brand manager and franchiser has a strong record of success with acquisitions and we would expect more are likely. It holds the intellectual property rights to Donut King, Bb’s café franchise systems, Michel’s Patisserie, Brumby’s Bakeries, Big Dad’s Pies and DCM Coffee and Donuts, operating a franchise model with more than 1000 stores across Australia, New Zealand and China.
RFG has solid underlying earnings and earnings growth remains positive, despite currently weak retail conditions and lack of shopping centre development. These weak conditions do pose a risk though, as well as higher interest rates and how the integration of acquisitions goes, including systems, franchisees and suppliers.
This Brisbane-based banking, insurance, wealth management and financial services provider has appeal on three main fronts – transformation under a new CEO, bank leverage to the improving economy and surplus capital generation. With Patrick Snowball alleviating 1H10 forecast rebasing concerns in virtually every interaction with the market since he arrived, and conditions clearly improving for Suncorp’s stressed asset exposures, we feel downside risk has moderated sufficiently to argue a more positive case.