Six ROE-yielding Stocks to Hold

 
Ramsay Health Care Limited



RHC Details

Strategic investments: Ramsay Health Care Limited (ASX: RHC) has finished worth $126 million in brownfield capacity expansions and upgraded the guidance of Core NPAT and Core EPS growth to 15% - 17% for full FY 2016 as compared to its earlier estimations of 12% - 14%. Meanwhile, RHC withdrew from the joint venture with Chinese company Jinxin in the city of Chengdu as the number of threshold conditions precedent were not satisfied. This move from the group indicates the cautious expansion steps given the tough conditions in the Chinese economy. RHC stock has risen 11.67% in the last six months (as of July 08, 2016). We believe that the expansions would further add to the revenue of the company, and accordingly we give a “Hold” recommendation on the stock at the current price of $72.39
 

RHC Daily Chart (Source: Thomson Reuters)
 
Coca Cola Amatil Ltd



CCL Details

Efforts to return to mid-single digit EPS growth: Coca-Cola Amatil Ltd (ASX: CCL) is ahead of schedule with its three year $100M cost savings plan in Australian Beverages to combat the falling sales and earnings per share between 2012 to 2014. In addition, CCL is on track to return to mid-single digit growth in EPS over the next few years and increased contributions from growth segments, especially Alcohol & Coffee is being witnessed. Meanwhile, CCL’s parent company has invested US$500 million in Indonesia to jumpstart growth. Moreover, 2016 capex is expected to be higher than 2015 as deferred capex spend from 2015 is being incurred. However, the core Australian Beverage market has underperformed due to structural shift as the younger Australians shunned Coca-Cola in favor of healthier alternatives. UK government has introduced a “sugar tax” on products like Coca-Cola that contain high amounts of sugar. Therefore, to recover from this situation, the company has diversified into retailing of bottled water, coffee, and alcoholic drinks. CCL stock has a good dividend yield and is trading at a reasonable P/E. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $8.89
 

CCL Daily Chart (Source: Thomson Reuters)
 
Newcrest Mining Ltd



NCM Details

Topacio update and five-year exploration permit: Newcrest Mining Limited (ASX: NCM) is awarded five-year exploration permit (MEP 60144) for the Rahu Project by the New Zealand Government in May 2016. For this, a binding agreement has been signed between Newcrest International and New Talisman Gold Mines Limited (NTL). Accordingly, NCM would manage the exploration activity on the Rahu Project, and invest NZ$5.0 million. Over 20% interest would be transferred to NTL and 20% of the Rahu project would be held on Trust by Newcrest on behalf of NTL in the interim, subject to Ministerial consent.
 


NCM’s cost competitiveness (Source: Company Reports)
 
Meanwhile, NCM has completed the first phase of soil sampling which is a part of stage 1 exploration program covering the full Topacio Gold Project concession, located in southeastern Nicaragua. In fact, stage 1 airborne geophysical survey (incorporating magnetics and radiometrics survey over 93km² concession) is about to commence at the Topacio Gold project (JV between Oro Verde and NCM). Moreover, NCM has restarted mining at the Kencana mine, a part of the Gosowong operation. The group’s production at its core assets- Lihir, Cadia and Golpu are also witnessing organic growth. The stock has surged about 20.76% in the last one month (as at July 08, 2016) with the recent rally in the gold prices, and we maintain our “Hold” recommendation on the stock at the current price of $26.63
 

NCM Daily Chart (Source: Thomson Reuters)
 
Retail Food Group Ltd



RFG Details

Acquisitions to drive growth: Retail Food Group Limited (ASX: RFG) has estimated FY16 earnings growth of 20% to $66 million. Meanwhile, RFG is expanding via acquiring brands; and in FY16, the company’s revenue has increased due to first full year contribution from the brands Gloria Jeans Coffee (purchased for $163 million), coffee wholesaler Coffee Di Bella ($30m), as well as New Zealand-based mobile coffee business Café2U acquired in FY15.
 


Company Outlook (Source: Company Reports)
 
The company earlier stated that coffee wholesale and franchise network opportunities would lead to business expectation of about $16 million over three years, adding to about 1000 outlets across 40 countries (500-plus international outlets) to the previous base of about 1500 outlets concentrated in Australia. RFG stock has risen 23.42% in the last six months (as of July 08, 2016), and has a lucrative dividend yield. We give a “Hold” recommendation on the stock at the current price of $5.50
 

RFG Daily Chart (Source: Thomson Reuters)
 
Flight Centre Travel Group Ltd



FLT Details

Unsecured Note Prospectus released: Flight Centre Travel Group Ltd (ASX: FLT) released its FLT 2016 Business Ownership Scheme (BOS) Unsecured Note Prospectus on July 11, 2016 as lodged with the Australian Securities and Investments Commission that relates to issue of unsecured notes to FLT’s shop managers and senior managers invited to participate in the BOS. Funds raised are said to be used towards working capital requirements. Meanwhile, FLT downgraded its FY16 earnings 2%-5% lower than its previous year’s earnings due to Zika virus affecting popular destinations coupled with higher expenditure incurred by the group to enable future expansion. As a result, the stock has fallen 19.12% in the last six months (as of July 08, 2016). Meanwhile, FLT has a strong business model and had acquired StudentUniverse.com and BYOjet.com which combined together, are expected to report in excess of AU 500 million in TTV during FY17. Moreover, FLT intends to launch Ireland leisure travel business and Aunt Betty, a virtual travel agent in FY17. However, the group has also cut the fares to attract travelers. The stock has a decent dividend yield and is trading at a reasonable P/E. We give a “Hold” recommendation on the stock at the current price of $31.42
 

FLT Daily Chart (Source: Thomson Reuters)
 
REA Group Ltd



REA Details

Expansion into different geographies: REA Group Ltd (ASX: REA) has completed the acquisition of Flatmates.com.au Pty Ltd which is a market leading player in share accommodation in Australia. The group acquired Asia’s focused portal iProperty Group as well as invested in US’s Move Inc. Moreover, REA has increased the marketing initiatives in Italy to continue its expansion in Europe. Meanwhile, REA has reported a strong revenue increase of 20% in March quarter as compared to corresponding quarter last year and has expanded its free cash flow by 31% on a yoy basis. We maintain a “Hold” recommendation on the stock at the current price of $62.34
 

REA Daily Chart (Source: Thomson Reuters)

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.