We asked our contributors to pick their favorite stocks to buy in November. Here are their top ideas.
Mike King: The Reject Shop (ASX: TRS)
By June 2014, The Reject Shop will have opened 80 new stores within two years, as it takes advantage of the demise of its major competitor with its store count heading toward 320. Many of those stores will only reach maturity in the next couple of years, so revenue growth is primed to surge.
With earnings likely to grow at more than 20% per year over the next few years, The Reject Shop has been underestimated by the market, and at current prices represents an opportunity for Foolish investors.
Motley Fool analyst Mike King does not own shares of The Reject Shop.
Tim Roberts: Atlas Iron (ASX: AGO)
Atlas is my pick in the iron ore sector. Despite an 18% rally for the month, the stock remains undervalued compared to its peers. Atlas released its quarterly report during the month; key highlights included:
- Record 2.5 million tonnes shipped during the September quarter
- EBITDA of $91 million during the September quarter
- Gross cash reserves of $378 million
- Mining costs of $49-53 per tonne (ready to be shipped)
The strength of the quarterly results provides confidence Atlas will achieve or beat FY14 guidance of 10 million tonnes of shipped iron ore. While China continues to grow, I will continue to recommend Atlas as a buy.
Motley Fool contributor Tim Roberts owns shares in Atlas Iron.
Peter Andersen: Chesser Resources (ASX: CHZ)
Chesser Resources is a gold explorer whose major asset is the highly prospective Kestanelik project in north western Turkey. At present Kestanelik is at the pre-feasibility stage and indications are very positive for development to proceed within the next two years. Kestanelik has easy access to existing infrastructure, labour and port facilities and will be a low-cost resource.
Development costs are estimated to be in the region of US$100 million and cash costs are expected to average US$418/oz for the life of the mine, providing a large margin of safety. Selling at 11 cents, Chesser Resources appeals strongly as a speculative investment with considerable upside potential.
Motley Fool contributor Peter Andersen owns shares in Chesser Resources.
Andrew Mudie: Qantas (ASX: QAN)
While Qantas may seem like a poor choice considering the price competition and poor financial results of the past, Qantas CEO Alan Joyce has put in place a strategy to turn around the company. It's buying new aircraft, negotiating hard with unions, retiring old, inefficient aircraft, signing codeshare agreements with international partners, and expanding Jetstar into Asia. All of this should result in increased profits and lower costs, which will allow the company to squeeze the profitability of domestic rivals. Risk remains but the share price has been unfairly punished in the past six months and represents a longer-term turnaround story.
Motley Fool contributor Andrew Mudie does not own shares in Qantas.
Ryan Newman: ResMed (ASX: RMD)
ResMed is the developer and manufacturer of products that assist with the treatment of sleep-disordered breathing. Whilst the company last week announced its 74th consecutive quarter of revenue growth of 5% compared to the previous corresponding period (as well as a 14% increase in net income), investors smashed the stocks down in value.
The company has established itself as a leader in the industry and its brands are more widely recognised than others in the sector. With shares now trading at a discounted price, investors have been given the perfect opportunity to pick up an interest in this quality company.
Motley Fool contributor Ryan Newman does not own shares of ResMed.
Owen Raszkiewicz: Yellow Brick Road (ASX: YBR)
With a 20% rise in the Australian stock market over the past year, many fund managers are fairly, if not overvalued and have less growth potential than Yellow Brick Road.
Headed by Chairman Mark Bouris (founder of Wizard Home Loans and host of The Apprentice), you know the company is in good hands. Although it is yet to make a profit, in FY13 (compared to FY12) revenues grew 68% (including mortgages, up 118%; wealth management, up 217%; and general insurance, up 29%). It has a healthy cash position and I believe it will now experience the benefits of an aggressive marketing strategy and bullish stock market.
Motley Fool contributor Owen Raszkiewicz owns shares in Yellow Brick Road.
Tim McArthur: Australian Agricultural Company (ASX: AAC)
My stock this month is unlikely to be familiar to many investors, which is surprising given the company was established in 1824 and is Australia's largest cattle and beef producer with a herd of 561,000 head of cattle and a property portfolio which spans over 6.5 million hectares. Farming is an inherently difficult business, subject to the vagaries of the weather and soft commodity prices. Along with these always present issues, AACo has also had to navigate the previous Labor government's ban on the live export market and the burden of a debt heavy balance sheet.
A recently completed capital raising has significantly strengthened the balance sheet and provided the funds required to complete the construction of the Darwin Abattoir, which will allow AACo to become a vertically integrated business. As the battle for Warrnambool Cheese & Butter Factory (ASX: WCB) highlights, there is enormous pent-up demand for strategic food and agricultural assets. Post capital raising the company has a stated net tangible asset backing of $1.52 and with the shares currently trading at $1.12 there looks to be reasonable upside for investors purchasing the stock at this point.
Motley Fool contributor Tim McArthur does not own shares in Australian Agricultural Company or Warrnambool Cheese.
Claude Walker: Beyond International (ASX: BYI)
This television content producer and distributor is my pick for November, on the back of its recently announced agreement to form 7Beyond with the Seven Network.
At the current offering price of $1.95, the company currently trades on a PE ratio of less than 13 and I expect the company to yield 4% (unfranked) in FY 2014. The company's most profitable activities are production and copyright management, and the recent JV suggests it will grow profits in the coming years. Buyers should be patient, however, as the stock is only lightly traded, and the share price is already up 10% since I covered the company a little over a week ago.
Motley Fool contributor Claude Walker does not own shares in Beyond International.
