Forum Archive Index - December 1999

["hugh webber" <hugh.webber@clear.net.nz>]

Ok, here's a rough pick of the ten best stocks of 1999 on the basis of a
sustainable increase in earnings. I don't expect to win the box of
chocolates for this as its agin the conventional wisdom....
I invest for gross yield on a sustainable basis these days and its
surprising how the big capital gains come as a byproduct - Hallensteins
bought at 1.60, Air NZ A bought at 1.80......(yeah, sold both now at the
top of the market)
but you other guys prefer living dangerously for the same sort of capital
gain but sometimes get the reverse....who said that dirty word Global
Chrome....I guess it gives you an adrenalin buzz as well as saving having
to do any serious analysis....;-)

Actually as Buffett says the price doesn't really matter. If you invest in
a quality share with solid rising earnings for the medium/long term then it
doesn't matter what the price goes down to as it becomes 'unfashionable'
(HLG was unfashionable, not picked by any broker when I bought it) even
down to zero, nor does it matter it if goes up to dizzy heights as you've
already picked your time frame and as Buffetology shows the dizzy heights
were later exceeded by even dizzier heights. The list below is not in order
of merit and is arguable on the same basis that I chose it. I started going
through a newspaper table and dividing the price per share by the price
earnings ratio but I couldn't find a satisfactory year ago comparison so I
decided to do a top of the head list which may omit some worthier
candidates if chosen on he same criteria. I'm open to correction. Oops that
's 12, I'll delete Lyttelton and Fisher and Paykel.

Carter Holt (I don't go for commodity stocks but never mind); $2.5 billion
sale of Copec against its coy debt of $3 billion together with rising
forest product sales prices and cost reductions.
Auckland Airport - a classic consumer monopoly together with exponentially
rising traffic and huge land development and landlord potential.
Baycorp - they do well in good times, they do well in bad times, they're
expanding into Australia and those profits just keep inexorably rising.
Fisher & Paykel - penetrating both Australia and the USA, favoured by the
improved exchange rate, well managed, diversifying into other rapidly
growing industries...
Fletcher Building - about to be relieved of the millstone of FCL Forests
and FCL Paper debts, a growing NZ economy.
FCL Energy - ditto plus big rises in oil prices which look sustainable as
long as OPEC hold together which it now seems likely to.
Lyttelton Port - averted the West Coast jetty threat, growing steadily as a
hub port, land development potential, well managed.
Also Ports of Auckland and Port of Tauranga (they'll settle into a
duopoly).More consumer monopolies in the buffett sense.
Sanford. The world is getting shorter and shorter of fish, there's limited
stocks prices have risen and the kiwi has gone down.
Tourism Holdings. We heard about the fourfold earnings increase from one of
our forum members.
The Warehouse. Growing exponentially, a successful formula and liable to
hit the Aussies equally as hard.



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