Stocks to watch: Guinness Peat, Pumpkin Patch, Telecom, Tourism Holdings, Ebos

Thursday 4th March 2010

Allied Farmers shares extend their slide south, Guinness Peat continues it's rise and Pumpkin Patch stands to benefit from exchange rates. Meanwhile, some Tourism Holdings shareholders have been targeted by an Australian buyer and Ebos' rating is upgraded on the latest Daily ShareChat.

Guinness Peat Group (NZX: GPG ): The stock rose 2.2% to 92 cents yesterday, the highest close in 14 months. On Monday, chairman Ron Brierley said a "value return" to shareholders was the company's top priority, reviving an idea that was put on hold during the financial crisis. "The suggestion is they might return cash, or give GPG shareholders Coats shares," said Alan Moore, who helps manage $300 million at Milford Asset Management.

Pumpkin Patch (NZX: PPL ): The children's clothing chain counts Australia as its largest market and stands to benefit as the kiwi dollar has weakened to a nine-year low against the Australian dollar. Economic growth in Australia accelerated in the fourth quarter, according to government figures yesterday. The shares rose 2.4% to $2.14 yesterday.

Telecom (NZX: TEL ): Capital & Coast District Health Board is suspending its contract with the phone company because senior board staff said outages with its troubled XT network were putting patients at risk, the Dominion Post reported. Chief executive Ken Whelan told a board meeting yesterday he was "very disappointed" with the phone company's performance, according to the report. Neighbouring Hutt Valley District Health Board is also considering cancelling its Telecom contract. The shares rose 2 cents to $2.21 yesterday.

Tourism Holdings (NZX: THL ): The campervan operator yesterday said it has become aware of an unsolicited proposal by a person in Australia to some shareholders seeking an option to buy their shares. "Neither THL management nor the board has received any meaningful information about the proposal, the company said, advising shareholders ignore the approach. The shares rose 2.2% to 95 cents yesterday and have climbed about 15% this year.

Allied Farmers (NZX: ALF ): The shares extended their slide yesterday, falling 7% to 7 cents. The finance company this week released a valuation that showed Hanover and United assets it paid for with $400 million of its own shares are worth less than half that amount now. The assets have slumped to $175.5 million under NZ IFRS reporting, from a gross realisation value of $396 million at the time the deal was announced last year.

Diligent Board Member Services (NZX: DIL ): Brokerage McDouall Stuart said 2010 will be a “breakthrough year” for the provider of services to company boards of directors, which is current trading at a discount in the market. It is “only a matter of time before DIL gets materially rerated,” the brokerage said in a report. It rates the stock a ‘buy’ and has a 12 month price target of 80 cents. The shares slipped 2.2% to 44 cents yesterday.

Ebos Group (NZX: EBO ): The medical products distributor was raised to ‘buy’ from ‘hold’ by Selwyn Blinkhorne, an analyst at Craigs Investment Partners, according to the ShareChat website. The company’s first-half profit of $11.7 million beat Blinkhorne’s forecast and he has now lifted his full-year estimate to $24 million from $23.3 million. The stock rose 5 cents to $6.31 yesterday, near the highest in at least two decades.

Widespread Energy (NZX: WEN ): The company was rated as a stock to watch over the next 12-18 months by brokerage McDouall Stuart, along with its affiliate Widespread Portfolios (WID) after they gained a prospecting permit for an area of the Chatham Rise that contains rock phosphate used a fertilizer. The companies would likely sell down their interest to a party capable of funding the estimated US$300 million development costs. WEN last traded at 12 cents on Feb. 26 and WID traded on March 2 at 17 cents.

Economic themes of the day: Investors' sentiment for higher yields was bolstered by the Greek prime minister outlining a new austerity measures through spending cuts and higher sales taxes, sapping demand for so-called safe haven assets such as the US dollar.

Stocks on Wall Street were mixed with the Federal Reserve confirming February's snowstorms sapped what was an otherwise stronger month. The kiwi dollar edged up to 69.51 US cents on the upbeat outlook, though it lagged behind its peers as investors pay more attention to the widening yield differential between New Zealand and Australia.

Businesswire.co.nz

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