New Zealand companies are missing from the 10 best stock ideas released last week by Australian research firm Morningstar. Some companies that have ties to New Zealand are included in the list.
Goodman Group has operations in New Zealand and Woolworths operates the Countdown supermarket chain through Progressive Enterprises.
Commonwealth Bank of Australia is the parent company of New Zealand's ASB.
Morningstar director of equity research Carolyn Holmes said the ideas, chosen from coverage of about 220 companies, were intended to have a broad application in a variety of equity strategies.
However, individuals should consider their personal investment goals and positioning before investing.
The company Alumina (AWC) was removed from the best stock ideas list, she said.
‘‘In aluminium, we expect weak Chinese demand and relatively strong supply from China with new low-cost production to outstrip capacity curtailments.''
Alumina capacity additions in China would probably accompany new aluminium supply, placing pressure on alumina prices. Aluminium and alumina supply outside China would grow slowly, probably met primarily through capacity creep and operating efficiencies, Ms Holmes said.
The additions came at very low capital and operating cost. Falling production costs and lower demand growth meant alumina prices were likely to remain lower for longer.
Morningstar best stock ideas
Ainsworth Game Technology: Earnings are at present being held back by weakness in Australia as a result of a lull in new product release and higher component costs due to the weak Australian dollar.
Earnings are expected to recover strongly as recently unveiled new domestic products gain traction, further aided by continuing robust growth in America.
Brambles: The market is not recognising the upside from additional growth investment in its core pallets business. During the next four years,
Brambles will allocate $A1.5 billion of growth capital expenditure to new pallet offering, which is expected to expand customer choice and widen its competitive advantage.
Commonwealth Bank of Australia: The bank offers good value and is Morningstar's preferred Australian major bank.
CSL: CSL is the largest healthcare stock on the ASX and the world's largest blood plasma fractionator by market capitalisation.
Crown Resorts: Crown Resorts is regarded as a unique company offering defensive earnings and an attractive growth profile through its Macau investments, as well as new casinos planned to be build in Sydney and Las Vegas.
Goodman Group: Goodman's geographically diversified and vertically integrated business model remains well positioned to deliver solid medium-term earnings growth.
The group is taking advantage of elevated industrial property prices by selling assets in subepidermal locations and redeploying the capital to build new, higher-quality properties in locations with strong demand.
Qube Holdings: The company's strategy to consolidate the fragmented logistics chain should deliver above-market rates of growth and scale benefits.
ResMed: The group was affected by negative sentiment in recent months, generated by the disappointing results of the Serve-HGF trial, which in turn led to its shares trading at an attractive discount.
While the unfavourable result was a setback, the clinical evidence to date linking sleep-disordered breathing to a series of medical disorders beyond cardiology represent commercial opportunities.
Woolworths: The new strategy of reducing grocery prices to close the margin between Woolworths and its competitors is positive but will be negative for short-term profitability.
Announcements around the appointment of new, experienced and capable senior management, and the potential sale of Big W - another poor-performing business - could be viewed positively by the market and may lead to a partial closing to the discount to Morningstar's fair value share price estimate.
Santos: Production at Santos should increase about 25% during the next year and earnings should rise 300% from 2015 oil-rout lows as the new Gladstone liquefied natural gas plant in eastern Australia complements the PNG lng plant in Port Moresby.
Santos also faces the favourable prospect of higher domestic gas prices on its domestic infrastructure.
