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Youssef’s top 10 stocks for 2010

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by Peter Switzer

With earnings season in full swing, I put it to Austock’s private client expert Joseph Youssef to see what his top 10 stocks for 2010 were. As usual, he didn’t disappoint and he provided some stocks with some interesting upside.

Number one

His number one stock was Boart Longyear, which is the number one drilling company in the world. The company has KO’d its debt challenges and is well placed to benefit from an improving outlook for commodity prices. The target for the stock is 50 cents and is currently in the 30 cents-plus range.

Risks include the tough pricing policies of the likes of the big miners and global demand.

Thumbs up

By the way, the Reserve Bank’s Deputy Governor, Ric Battellino has given the Chinese boom the longevity tick and Deloitte Australia’s CEO, Giam Swiegers has recently given the global outlook the thumbs up following feedback from Deloitte offices around the world.

Top ten continued

Youssef’s second stock is insurer, QBE.

He says the company has a great balance sheet and has a near six per cent dividend. The big challenge for the company is the money it makes in the US and the strength of the Aussie dollar but he thinks the greenback will improve against the Aussie as interest rates rise in the States.

Number three is ANZ, which he says trades at a discount to its rivals. It has the best tier one capital position of all the banks and it’s moving into wealth management now with a focus on Asia. Joe says he has been selling CBA ex dividend to buy ANZ cum dividend.

Next, he likes Westpac, describing it as the best bank with the St.George synergies to yet to kick in. He sees a $30 price for the bank as a real possibility.

His favourite miner is Rio Tinto, especially now that it has nailed its debt challenges. The spot price of iron ore battle it seems to be winning with the likes of China is good for its bottom line and he thinks it’s still a takeover target for BHP-Billiton!

His next stock is Bluescope Steel, which did not report well recently, but he says the steel slump has now bottomed and the December quarter of the last six months result was actually profitable. He accepts that the price of iron ore could be the company’s biggest hurdle.

The seventh stock is Transurban, which he says is a $6 target. It’s in acquisition mode and is well placed to have a big few years as the economy rebounds.

Number eight is Connect East, which is a mini-Transurban with a road from Frankston in Victoria. The company was once considered a takeover target by Transurban at $2, and at 40 cents Joe thinks it is good buy. It’s in loss but it was much smaller than expectations and it’s in the early phase of the road, where initial costs are always high.

Mineral Resources is his next pick and with a target price of $10.45 and a current price under $7, he thinks this represents real value. The company has a lot of projects ‘under the shovel’ and Joe thinks a good news story could kick along the share price big time.

Finally, he likes News Corp which he describes as the best media stock, helped by its Pay TV, DVD business and Avatar. He really was confident about this one and I reckon Rupert Murdoch would think very highly of Joseph Youssef’s judgement!

For advice you can trust, contact Switzer Financial Services.

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Published on: Thursday, February 25, 2010