Morning Report Thursday 26 March 2015
Mergers and Acquisitions continue as Heinz merges with Kraft Food
Money remains in all senses “free”, as companies that are desperate for growth in this anaemic economic environment try to keep shareholders happy. Corporate activity and acquisitions are clearly the plan for a number of company boards. After our great success being long iiNet for the bid by TPG Telecom and Japan Posts $6.5 billion bid for Toll Holdings it’s time to consider some other potential takeover targets. Picking either takeover targets or corporate activity is very hard at best, but when it’s added to an investment or trade I like it’s cream on the cake!
1. Dexus Property Group (DXS) – ING Group remains a major shareholder with 7.15% of the company. Technically the stock looks great with 10% upside, while running a stop under $7.30 – see chart 1.2. GPT Group (GPT) $4.61 – Rumours of a potential takeover have been around all year, press talk rarely comes to fruition and the stock is not cheap at current levels, but money is. Importantly, both the individual stock and sector currently look good to me – see charts 2 and 2b.3. Fortescue Metals (FMG) – Any strategic corporate activity, especially around debt relief could easily see a 25% rally in the stock, which is my technical target area - see chart 3.4. Santos (STO) and Origin Energy (ORG) – There are no clear targets in the oil and gas sector but the 50% slump in the oil price is likely to have these strong stocks e.g. Woodside, Exxon Mobil and Caltex looking for bargains. Technically STO looks prime for a rally, but ORG remains negative – see chart 4 & 5.5. Vocus (VOC) – A large American merchant bank last week pointed out that VOC is a takeover target for both TPG (TPM) and M2 Group (MTU), although like the market, it’s currently not cheap. I am keen on the stock on its individual merits – see chart 6.
Show more...
