Markets blue healers


Published in the Herald Sun, June 2011 by Karina Barrymore

Blue is the new "black" on the investment fashion stakes blue chip that is as Australian investors once again turn to the tried-and-true companies to put together the basics of a good share portfolio.

Despite being almost four years since the global financial crisis began wrecking havoc, many investors and markets are still feeling the aftershocks.

The average Aussie balanced superannuation fund, for example, still has not recovered its losses and neither have many share portfolios and managed investments.

A lack of confidence, economic uncertainty, unpredictable profit and, of course, the occasional blindside share-market slump still make it difficult for most people to make investment decisions.

But according to experts, we're finally starting to head into a more "mature phase" in which investors expect conditions to be less volatile and more predictable.

UBS head of investment strategy, George Boubouras, and investment analyst Abby Macnish say signs of rising inflation in both emerging and developed countries indicate that many economies are finally back on track for new growth.

With this in mind, UBS has picked its top 10 Australian shares that no share portfolio or super fund should be without.

And to help kick start that long-term road back to recovery for your investments, the analysts have also given their share-price forecast for each stock during the next 12 months.

Fund manager Wealth Within analyst Dale Gillham also cast his eyes over the portfolio recommendations and gave it the thumbs up. However, he emphasises that most long-term investments, particularly superannuation, has two phases, accumulation or growth then pension or income phase.

Shares that increase in price, known as growth stocks, typically don't pay that much in dividends, Mr Gillham says.

And in turn, shares that are good dividend payers generally have slower price growth.

"Therefore, I'm always inclined to select stocks for the purpose at hand," Mr Gillham says.

"The UBS portfolio seems to be made up of a balance between the two. It has stocks that are good growth stocks, such as BHP and Rio, together with high income stocks such as NAB and CBA."

"The higher dividends of some of these stocks are also a result of heavy falls in the share price over the past few years, so this may represent a good opportunity for the medium to long-term investor."

Top 10 stocks for every Australian

AMP

Sector: Financials.

Price growth: 19 per cent

What it does: AMP provides life insurance, superannuation, asset management products and financial services in Australia and New Zealand. 

BHP BILLITON

Sector: Materials.

Price growth: 21.7 per cent

What it does: BHP is the world's largest international resources company. Its main lines include mineral exploration and production, including coal, iron ore, gold, titanium and nickel. 

COMMONWEALTH BANK OF AUSTRALIA

Sector: Financials.

Price growth: 10.6 per cent

What it does: CBA provides banking, life insurance and related services for individuals, small businesses and medium-sized commercial firms. CBA also has corporate and general banking, international financing and institutional banking. 

NATIONAL AUSTRALIA BANK

Sector: Financials.

Price growth: 9.5 per cent

What it does: NAB is an international banking group which operates in Australia, New Zealand, Europe, Asia and the US. The group offers banking services credit and access card facilities, leasing, housing and general finance. 

ORIGIN ENERGY

Sector: Energy.

Price growth: 13.8 per cent

What it does: Origin is involved in the exploration and production of oil and gas and the retailing of natural gas, liquefied petroleum gas and electricity. It also participates in natural gas-fired co-generation and power generation. 

RIO TINTO

Sector: Materials.

Price growth: 31.3 per cent

What it does: Rio is an international mining company. It has interests mining for aluminium, borax, coal, copper, gold, iron ore, lead, silver, tin, uranium, zinc, titanium dioxide, feedstock, diamonds, talc and zircon. 

TRANSURBAN GROUP

Sector: Industrials.

Price growth: 8.1 per cent

What it does: Transurban operates the Melbourne City Link and Hills Motorway M2 toll roads. It also develops and operates electronic toll systems. 

WESTFIELD GROUP

Sector: Property/financials.

Price growth: 13.3 per cent

What it does: Westfield is a property trust that invests in, leases and manages retail shopping centres in Australia, New Zealand the US and UK. 

WOOLWORTHS

Sector: Consumer staples.

Price growth: 8.2 per cent

What it does: Woolworths is a supermarket, specialty and discount department store operator as well as liquor and electronic stores throughout Australia. It also manufactures processed foods, exports and wholesales food. 

WOODSIDE PETROLEUM

Sector: Energy.

Price growth: 16.8 per cent

What it does: Woodside explores for and produces oil and gas from offshore and onshore facilities in Western Australia and Northern Territory. It also operates numerous gas and oil fields and pipelines throughout Australia, and the US. Its products include liquefied natural gas, domestic gas, crude oil and LPG.


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