I have no doubt; the share market will bounce back.
But if you don’t believe me, let’s weigh it up.
Are interest rates low? Check.
Are — already expensive — property prices coming off the boil? Check.
Is a lower Aussie dollar providing relief for local companies? Check.
Are 5% plus FULLY FRANKED dividends readily available on the ASX? Absolutely!
And, finally – but perhaps most importantly – are share prices low? Check. Check. And Check.
Step up, the sharemarket.
Now, I’m not some candlestick-slinging day-trading cowboy predicting the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) to bounce back 500 points overnight.
I’m merely saying that the stage is set for savvy investors to load up on quality Australian companies to hold for the long-term.
No doubt they’re caught in the crosshairs of some savvy investors.
But are they a buy today? Let’s take a quick look at each.
National Australia Bank Ltd.
So far in 2015, NAB shares have fallen 11%. Indeed, it’s been a tumultuous ride for Australia’s largest business bank. This year, it’s rid itself of billions of dollars of bad debt, sold down its US bank, Great Western Bancorp; broke the Australian record with a $5 billion rights issue, and announced the sale of its UK Bank, Clydesdale; to public markets.
On top of that, the serial underperforming big bank has had to contend with regulatory changes, slowing economic growth and souring investor sentiment. So is the 11% selloff in NAB shares justified? I think so. In fact, I’m on record as saying $20 would be a good buying level for NAB shares. Therefore, at its current price of around $30, I think it’s outside the buy zone.
Liquefied Natural Gas Ltd
LNG Ltd was a star performer in 2014 – soaring as much as 1,400% and taking the crown as 2014’s best performer. However, 2015 has so far proven to be a completely different story, with shares of the ASX 200 company down a jaw-dropping 43%. For those unannounced, LNG Ltd owns two prospective natural gas tolling facilities in North America. It hopes to develop these enormous projects into terminals that will allow local gas producers to export and transport natural gas as LNG on huge ships to foreign countries.
However, the company has significant work to do if it is to get the projects off the ground. Unfortunately, investors appear to have grown nervous about holding the company’ stock in the face of falling commodity prices – perhaps rightly so. I sold 95% of my shares in the company at prices well over $3 – it’s now hovering around $1.40.
There probably hasn’t been a single day in 2015 when Woolworths hasn’t appeared on the mastheads or in columns of Fairfax and News Corp publications. No doubt there is currently a lot of negative sentiment circling Australia’s largest supermarket operator. Indeed, with shares down more than 18% in 2015 alone, investors have become increasingly concerned about growing competition in the supermarket space, a lack of strategic conviction and a looming CEO appointment. I have a financial interest in Woolworths through my family’s portfolio (see below), but I’m still not willing to say it’s a clear cut buying opportunity – even at these levels.
Buy, Hold or Sell
The sharemarket is going to attract a lot of money when people begin to realise they have few viable alternatives.
I think the three above companies deserve a spot on Australian investors’ watchlists, but Woolworths is the only one I’d consider building a position in at today’s prices. However, until it gives investors some clarity over its CEO appointment, I’d rate it as a ‘hold’.
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Motley Fool contributor Owen Raskiewicz owns shares of Liquefied Natural Gas Limited and has a financial interest in Woolworths Limited.
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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