Stocks to watch: Briscoe, Comvita, Michael Hill

Monday 8th November 2010

Briscoe's said trading conditions remain "patchy" despite a third quarter sales rise, Comvita struggles to achieve earnings growth thanks to the strong Kiwi dollar and Michael Hill's US foray looks to dampen short term share rises.

Briscoe Group (BGR): The homeware and sporting good retailer cautioned that trading conditions are still “patchy” despite reporting a rise in third-quarter sales. Sales rose 6.5% to $89.8 million in the three months ended October 31 with same-store sales rising 6.1%. Second quarter same-store sales fell about 2%. Shares rose 2.1% on Friday to $1.46.

Comvita (CVT): The honey products manufacturer is expected to struggle to achieve earnings growth despite robust demand, according to Craigs Investment Partners, quoted on the ShareChat website. The most recent guidance from the company is that earnings in the year ending March 2011 will be down about 28% due to the strong New Zealand dollar, even though local currency revenues will rise. Craigs is forecasting Comvita's net profit will fall to $4 million in each of the years ending June 1011 and 2012 compared with $5 million in 2010. Shares rose 0.5% on Friday to $1.95.

Fisher & Paykel Healthcare (FPH): The breathing device and respirator maker said it has awarded the construction contract for the third building on its Auckland site to Mainzeal Property and Construction. The company said it was expanding its premises to accommodate an expected pickup in growth. The total cost of the 31,000 m2 building project is expected to be approximately NZ$95 million. Shares fell 3.5% on Friday to $3.

Michael Hill International (MHI): The jewellery manufacturer and retailer told shareholders last week at its annual meeting that the stock is unlikely to rise in the short to medium term as it expands into North America, but will grow substantially in the longer term. The company’s previous foray in the US and Canada cost it $9.5 million as it was forced to close stores due to the recession, but said it still planned to roll out 63 more over the next three years. Shares fell 3.8% on Friday to 77 cents.

OceanaGold (OGC): The gold price is expected to continue climbing for another six months due to the impact of the second round of quantitative easing in the US, according to a Reuters poll conducted last week. Two out of three respondents see prices topping out between US$1,400 and US$1,500 an ounce on an interim basis, with most analysts surveyed expecting prices to peak during the first or second quarter of next year. The metal was last trading at $1,394.50 an ounce, and has risen 31% since January. Shares in Oceana rose 1.9% on Friday to $4.64.

Opus International Consultants (OIC): The engineering consultancy said it is set to acquire the Canadian engineering consultancy Dayton & Knight for C$15 million ($18.9 million). The acquisition will add 90 staff and four offices to Opus’ operation in Canada, bringing the total to ten, and is expected to contribute $2 million to Opus’ net profit in the first full year. Shares rose 0.6% on Friday to $1.79.

Themes of the day: US stocks are expected to extend their rally this week, amid signs that the US recovery is gathering steam and indications that the Federal Reserve is ready to further bolster growth if needed. US non-farm payrolls data showed employers added 151,000 jobs in October, the fastest pace of hiring since April and well above market expectations of a 60,000 gain. Wall Street closed on Friday with a fifth straight week of gains, with the Standard & Poor’s 500 Index closing 3.6% higher. The New Zealand dollar was at 79.24 US cents, down from 79.25 cents on Friday.

Businesswire.co.nz

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