Top stock picks for February

We asked our contributors to pick their favorite ASX stocks to buy in February. Here are their top ideas.

Tim McArthur: Sundance Resources (ASX: SDL)

In its recently released December Quarterly Activities Report, Sundance stated that it was well advanced in executing its strategy to develop the Mbalam-Nabeba Iron Ore Project in Central Africa. Importantly, the miner expects it will finalise an exclusive agreement for the construction of port and rail infrastructure by the June quarter 2014.

An investment in Sundance is not for the risk-averse as the company still needs to secure financing for the multibillion-dollar project.  While it will be years before the first iron ore is produced and shipped, purchasing stock prior to the finalisation of the constructing agreement could offer an appealing entry point for investors.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Owen Raskiewicz: Collins Foods (ASX: CKF)

As the operator and franchisor of KFC and Sizzler food chains, this small cap has established businesses throughout Australia and Asia.

Recently, management has undertaken significant acquisitions to expand its presence along the western seaboard of Australia. While it consolidates the Australian market and continues to rebrand its KFC stores, it should also experience an uplift in consumer confidence that will enable the company to grow revenues in FY14 and beyond.

At current prices, I believe the stock is significantly undervalued and could easily see it trading around $4 in the medium term. It maintains strong balance sheets and pays out a fully franked 4.6% dividend.

Motley Fool contributor Owen Raskiewicz owns shares in Collins Foods.

Claude Walker: Global Health (ASX: GLH) 

Global Health supplies software (as a service) to medical professionals such as psychologists, psychiatrists and other non-acute healthcare practitioners. Its main business is an electronic patient administration system called MasterCare, but it also has a secure messaging service for sharing medical information, called ReferralNet. The company does serve hospitals with its MasterCare system, although contracts from the acute sector are harder to win.

Of Global Health’s revenue, 80% was recurring in FY 2013, and the company recorded its maiden profit in the last financial year, easily beating its own guidance. The company is debt-free and expects to earn at least $1.5 million NPAT in FY 2014, putting it on a forward P/E ratio of less than 9.

I believe Global Health has significant growth prospects. It is a strong candidate for a speculative investment, at the current price of 42c per share.

Motley Fool contributor Claude Walker owns shares in Global Health Limited.

Ryan Newman: Select Harvests (ASX: SHV)

Although the almond producer rallied in excess of 300% in 2013, the company is still set to benefit from a number of factors. Management continues to focus on cutting costs and increasing production and there is also an upwards pressure on the price of almonds as drought continues to affect production in California, the world’s largest region (80% of the world’s almonds are produced in California).

At $5.92 per share, Select Harvests boasts a market capitalisation of $342 million and is trading on a P/E ratio of 11.3. While I believe there are still gains to be recognised, the company also offers a trailing 2.5% fully franked dividend yield.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Sean O’Neill: Beach Energy (ASX: BPT)

Beach Energy is a smaller combined oil and shale gas explorer and producer based in South Australia with a number of overseas explorations in Romania, Egypt, Tanzania and New Zealand.

Trading on a P/E of 14.39, with a dividend of 2% at its current price of $1.41, Beach appears reasonably priced given the potential upside in its explorations and predictions of a future shale gas boom. For investors like me who balk at paying $38 a share for Woodside Petroleum (ASX: WPL), Beach is a solid performer at a low price with plenty of room for growth.

Motley Fool contributor Sean O’Neill owns shares in Beach Energy.

Andrew Mudie: eServGlobal (ASX: ESV)

eServGlobal provides mobile payment solutions to over 1.2 billion mobile phone users around the world. Its core business is providing users with mobile payment and finance solutions, including services for telcos and loan broking in emerging markets. The core business has been going strong for 30 years but it’s the new HomeSend service that has me really excited.

Homesend allows users to transfer money from one phone to another in 51 countries. It charges among the lowest commissions in the industry and has access to 1.2 billion users through deals with international telcos. eServGlobal is up over 140% in the last year but has huge potential, particularly in emerging markets.

Motley Fool contributor Andrew Mudie does not own shares in any company mentioned.

Michael Besnard: Platinum Capital (ASX: PMC)

Platinum Capital is a closed end investment company with $389 million under management. Its strategy is to invest in international equity markets, using quantitative screening with employing proven sound risk management.

The company achieved an excellent pre-tax return of 50.1% for the year. Platinum has recently shown impressive longer term gains, with its market capitalisation of $160 million from July 2012 increasing to $412 million in January 2014. In the same time period, the share price has climbed from a low of 90c to a high of more than $1.85.

Motley Fool contributor Michael Besnard owns shares in Platinum Capital.

Chris Koenig: Select Harvests (ASX: SHV)

Like Ryan Newman, I have also chosen almond producer Select Harvests this month. Almonds are the most consumed of all nuts. It takes seven years for an almond plant to start producing nuts, which means that existing growers are well protected from competitors.

Over the past two years, global annual consumption has exceeded production. With a low price to earnings ratio, Select Harvests is an outstanding buy, especially as earnings should increase as the price of almonds is affected by the drought in California.

Motley Fool contributor Chris Koenig does not have shares in Select Harvests.

Tom Richardson: Westfield Retail Trust (ASX: WRT)

I expect Westfield Retail Trust’s growing portfolio of Australian and New Zealand shopping centre properties to remain as popular with tenants as they do with shoppers in the future.

Investors have been spooked by the proposed capital restructure of the Westfield businesses, with Westfield Retail Trust proposed to become part of a new entity known as Scentre Group. That uncertainty presents retail investors the opportunity to buy a top-quality business at a good price. I expect any interest in Westfield’s Australasian assets to handsomely reward investors over mid to long-term horizons.

Motley Fool contributor Tom Richardson does not own shares in this company.

Tim Roberts: Newsat (ASX: NWT)

Newsat is Australia’s largest pure-play satellite communications company. It’s on the brink of a major company transformational event, the launch of Jabiru-1, expected in 2015, which will be Australia’s first commercial Ka-Band satellite.

With a market capitalisation of only $272 million, Newsat appears to be a speculative buy. The key reasons supporting a buy include:

  • Total binding pre-launch contracts for Jabiru-1 satellite are now at US $644 million.
  • Contracts span up to 15 years.
  • At 70% utilisation, Jabiru-1 is expected to generate up to US $3 billion of revenue with margins at 85%.

Newsat is not for the risk averse investor but if operational plans are successfully implemented, the long-term upside could be significant.

Motley Fool contributor Tim Roberts owns shares in Newsat.

Peter Andersen: Servcorp (ASX: SRV)

With no debt, good operating cash flow and over $90 million in the bank, Servcorp is a financially strong serviced/virtual office provider with operations throughout the globe. Having made a substantial capital investment (particularly in the U.S.) over the last few years, Servcorp is now set to reap the rewards.

Servcorp has a significant edge over rivals with industry leading technology, superior locations and a quality service ethic. Profits are expected to increase rapidly over 2014 and 2015 and this company is undervalued by the market. At under $4.50, I rate this one as a good buy.

Motley Fool contributor Peter Andersen owns shares of Servcorp.

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