Good Shares to Buy

Wayne Swan – Federal Treasurer will not exactly say how much revenue the government’s mining tax will generate until July next year, adding to concerns whether the amount raised by the levy will meet official forecasts. Global miners Xstrata, Rio Tinto and BHP Billiton, which negotiated the tax’s design with the government, have not provided much detail on their expected liability but have insisted that the tax is subject to variable commodity prices and the Australian dollar exchange rate.

Australian Pharmaceutical Industries (API) surprised the market and declared a profit for the first half of $18.3 million and the share price rallied by 8.8 percent to 37 cents. Stephen Roche who is a managing director was asked if a return to a share price of around $1 was likely and he responded that he would like that to be possible but “Let’s take one step at a time. This is about one, being seen to produce some underlying earnings that are sustainable, and second, having a point of difference and having a strategic position that’s worth investing in.”

The CEO of Telstra, David Thodey, is satisfied that the telecommunications group had finalised negotiations with NBN Co, the government-owned company responsible for rolling out the national broadband network. Under the terms of the agreement, Telstra (TLS) will receive cash flows for the next 30 years for the use of its infrastructure, while additional payments will be made every time a copper phone line is disconnected and replaced by optic-fibre. Many brokers have positive recommendation on Telstra shares.

Orbis Investment Management, has increased its holding in the operator of Kentucky Fried Chicken and Sizzler restaurants in Australia, Collins Foods (CKF). Orbis owns now close to 12% of CKF shares. Collins was the second largest float on the ASX last year, but a steep profit downgrade has caused investors to dump the CKF shares.

GrainCorp (GNC) released full-year results, showing a record net profit of $171.6 million, up 114 percent compared to the previous year. The result was driven by a record 24 million tonne Australian east coast grain harvest that lifted earnings from the company’s grain marketing division 125 percent to $71.9 million. GrainCorp said it would pay a special dividend of 20 cents a share, on top of a final dividend of 15 cents.

Oil and gas group Santos (STO) reported September 2011 quarter results, with revenue rising 27 percent year-on-year to $680 million, while revenue for the nine months to September was up 9 percent to $1.78 billion. Santos is benefiting from rising prices for oil and gas and from production increases as the company’s operations continue to recover from the recent floods in Queensland and central Australia.

A report by the Australian Council of Super Investors has shown that the median pay of non-executive directors of the top 100 Australian companies rose by 1 percent last year to $193,000. The report also showed that the median pay of chairmen of companies in the S&P/ASX 100 Index dropped 2.1 percent to $404,375, although the council says the fall was influence by several major companies being excluded from the study.

Microsoft and Nine Entertainment have abandoned plans to sell group buying website Cudo, which was launched in August last year with an initial investment of $800,000. It is estimated that the Cudo Pty Limited website is now worth close to $80 million. “There is going to be a shakeup in the group buying market. Nine and Microsoft think Cudo will benefit from that,” one industry analyst said.

The Australian sharemarket keeps going down, following concerns that the United States was facing another recession and the publication of a new report revealing that Australian investor confidence was at its lowest point in two years. “The market has pretty much closed on its low… there isn’t a lot of good news around at the moment,” James Rosenberg at Macquarie Private Wealth said.