In this section we provide readers with three stocks that have attracted the interest of the broking community or the ‘herd’. Broker recommendations tend to be biased and highly optimistic. We try and breakdown these barriers and give our own honest opinion. It is important to keep in mind that technical analysis is only one part of the investment process and any recommendations do not give consideration to the underlying fundamentals of each business.  Origin Energy (ORG) – Current Price – $9.10 – Is a gas and oil exploration and production company but also deals in power generation and energy retailing in Australia. LNG operation, energy retailing and power generations. It also conducts the business in New Zealand through a 53.09% investment in Contact Energy. Production basins include SA Cooper & SWQ, Otway, Bass, Surat, Perth, and Taranaki. It also holds a 37.5% investment in Australia Pacific LNG. It is the owner and developer of gas-fired power generation in Australia and also produces renewable energy from wind farms with 6,000 MW of capacity. ORG released its Quarterly Production Report for the quarter ended 30 September 2017 this week. Origin’s quarterly production of 89.1pje was stable compared to the June quarter, reflecting a sustained level of production. Origin held its investor day this week. Broker View:  Citi (HOLD $8.97) – The broker has become a little more confident following the $500m cost-out update at its investor day. There is also upside in guidance, but Citi remains on the sidelines on Neutral. Unconventional View: We disagree with Citi. We think Origin Energy is a Buy. The company upgraded guidance for FY output from its Eraring plant. Output in 2017-18 is now expected to be between 15.5 terawatt-hours and 16 terawatt-hours, about 6% higher than its August forecast. ORG shares are hitting 26 month highs. The company will also cut more than half a billion dollars in annual costs at its APNLG JV. That’s huge. Slashing both operating and capital expenditure will help the company boost its bottom line. It is targeting $1.30 per gigajoule in 2018 and $1 in 2019. The company is trying to replicate the success the US shale gas frackers have had with the shale gas boom. CEO Mark Schubert said “We’ll unashamedly copy that and bring it back here”. We think there is merit in this strategy. That aside, ORG is also looking to hit a breakeven oil price of US$24boe below its target of US$30boe. Origin also reaffirmed its full-year earnings guidance. All very positive stuff. If the company can achieve these targets there is huge upside potential in the share price. On the chart, the stock is trading at the upper end of its uptrend channel. Investors may want to wait for a dip. Either way, the stock is travelling in a solid uptrend and we recommend buying now.   RCR Tomilson (RCR) – Current Price – $3.90 – Is a diversified engineering and infrastructure company providing integrated solutions to clients in the resources, energy and infrastructure sectors. RCR’s…

To continue reading...

CLICK HERE NOW

Blurred Text