SMH tips - a mix of good and bad

I note that the SMH is recommending a few stocks, some of which we think look good:

1. Abacus Group (ASX:ABP) - see http://www.google.com/finance?q=ASX:ABP - the chart seems to suggest to me they are consolidating before making a move

2. Fairfax Media Ltd (ASX:FXJ): I much like Fairfax Media limited as well because I see the media companies benefiting from increased penetration of the Facebook and Twitter domains. The interesting aspect will be the revenue they will eventually derive from Facebook and Twitter for use of their stories. I am expecting the media groups to profit from sharing of media stories. See http://www.google.com/finance?q=ASX:FXJ. They will eventually realise they should be allowing you to share content, and to benefit from sharing that content.

3. Harvey Norman (ASX:HVN): The chart is less impressive to me, probably because they trade off higher priced, higher margin products, and that is not attractive in this internet-based revolution, so whilst earnings might recover in a strong Australian market, I think they will lose market share. So less attracted by this stock, and that is reflected in a less appealing chart trend. See http://www.google.com/finance?q=ASX:HVN.

4. News Corporation (ASX:NWS) - The Sydney Morning Herald is recommending media stocks to its readers. Does it not see a conflict of interest there? The stock is even trending down. Maybe that is why it feels compelled to recommend Fairfax. Anyway, we would be looking for signs of support in this stock before we signed on. See http://www.google.com/finance?q=ASX:NWS. I trust I am matching the right paper to the right group. I guess the problem for News Corp is its exposure to the weaker US and European market. So I would look for downside to that magical $10 support it always seems to go for. In the meantime, I'd go for Fairfax for media exposure.

5. Sims Metal Management (ASX:SGM) - This is a great stock, but this does not appear to be the time to buy them. I guess the problem is a shortage of scrap, but I must confess I do not know the dynamics of the industry. See http://www.google.com/finance?q=ASX:SGM.

6. Salamat Group (ASX:SLM): I actually know something about this group because of my partner's background in the call centre market. The stock has already recovered, and I don't have such a positive view of the industry, as I see people relying more upon online support, people being prepared to use more online support, and the outsourcing of business to offshore call centres, where they will see margins fall. Interesting they use Malaysia as a call-centre base. In this respect they will probably confront higher staff turnover than in the Philippines, as well as a smaller population base. They will have a better work ethic than Filipinos, however Filipinos are more personable, and I think provides a more sustainable call centre base. See http://www.google.com/finance?q=ASX:SLM. This stock I think will not yield much growth, but more likely trading volatility, in which case, you have missed the move already.

7. UGL Limited (ASX:UGL): I like engineering contractors like UGL, and the chart has some appeal, as I think we are destined to see a breakout. Resolution of the election will likely give greater comfort to investors that the company will be able to book more project contracts in future, so I can see this stock breaking resistance, but I would watch for confirmation of a positive trend, as I don't know the market position of this stock. See http://www.google.com/finance?q=ASX:UGL.

SMH also recommended some gold stocks, though I don't like the top end of the mining market. See my speculators blog.

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Andrew Sheldon www.sheldonthinks.com

Vector Energy (VCT.NZD) - break out

I actually didn't pick this stock up sooner, but in any respect Vector Energy in NZ has staged a break out, then fallen back to support (consolidating the move), and is now in an uptrend. This is of course a stock you could buy. I prefer the hydropower exposure, however the chart looks good. The reality is that all power companies in NZ are never going to have their precious margins questioned. The idea that NZ is a deregulated market is not in question. What is apparent is the uncompetitive market stucture which was put in place to guarantee NZ's paid taxes in the form of higher electricity prices, as opposed to taxes. All their profits when to investment bankers. Its a great scam if you get your share of the pie. I might add, Victoria (Australia) ran the same scam when they privatised their electricity assets. In the meantime, CEOs are giving themselves huge bonuses. Before they were accountable to the government....now....oh its the market....pricing signals...supply and demand :(

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Andrew Sheldon www.sheldonthinks.com

Aquarius Platinum (AQP:LSE)

There is some temptation to buy Aquarius Platinum (AQP) given the current strength in platinum prices. The problem of course is that I think this stock will under-perform as long as the broader commodities market is strong. There will come a time when copper, vanadium and other commodities which we associate with South Africa, get sold off. Until such time, I would expect AQP earnings to be effected by the strong Rand, as well as disruptions to mine production, which have just been resolved. The outlook for this company will otherwise be good as precious metals prices rise.

The chart also looks good, though I think I'd be looking for a market entry closer to support. We can see the previous resistance provides a line of support at 318 pounds.
You can buy this stock in Australia as well, as I did many years ago at 80c, but the chart is different. Its probably listed in South Africa too.

Andrew Sheldon www.sheldonthinks.com

Xero - accounting services (NZX:XRO)

I have not been watching blue chip stocks lately, though my suggested KDDI in Japan is doing well. I have come across a NZ stock which I think requires some attention. The NZSX is a relatively small exchange so good stories tend to slip past people. The stock is by no means a blue chip, but it could be. I note that the founders of MYOB haved taken a significant stake in the business. It is only capitalised at $123mil, but its quickly expanding globally, and it seems to be on top of its costs now, with still $23 million in cash.
The company has developed an online accounting solution for small-medium sized businesses (SMEs). I think its a great solution given the ease of taking your accounts on the road with you, the opportunity and desire to see your latest results on the go, and the ability to show people your latest financials. I also believe we will see in future corporate accounting become 'continuous' in the sense that you will have period reporting only for the purpose of comparison. We will not wait for quarterly results, we will want dynamic data for sales, etc. Maybe these will be processed straight away too, i.e. Straight thru processing. This is the future, but these guys seem to be well along this path. This is a big market, and I think this group will seize a part of it.
See their review and latest 6 monthly interim result.
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Andrew Sheldon www.sheldonthinks.com

KDDI about to reach previous low

KDDI is close to returning to its previous low, making it another great opportunity to pick up the stock at a very reasonable buy price. We recommended this stock last time it bottomed, and the current 'double bottom' offers another compelling opportunity to buy this stock. We expect a turnaround in earnings in years to come as they streamline costs. KDDI is the 2nd biggest cell phone seller and network operator in Japan after NTT Docomo.
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Andrew Sheldon www.sheldonthinks.com