Head of Research Stig Myrseth at Orion Securities has won the prize of “Stock Picker of the Year 2009″ in Norway six years in a row. This year he’s made his best result ever – increasing the value of his stock portfolio by wooping 167%, compared to the OSE benchmark index’ gain of 64,5%.
“It remains to be seen how sustainable the current cyclical upswing is, and the danger of a new setback when fiscal policy must be tightened in 2011, is not insignificant.”
Stig R. Myrseth
Mr. Myrseth use macro strategies, and his speciality is to recognize small undervalued companies with a big upside potential. He describes himself as a “gold digger”.
And golden shares he finds.
Mr.Myrseth writes in his latest research note:
“At this time a year ago the situation was fairly simple and to survey. The overriding question was as follows: Will the government’s massive stimulus real or are we facing a complete collapse of the capitalist system? Those who answered yes, bought the shares and have been richly rewarded for it, while those who answered no, stayed away from the stock market and bet instead on canned food, gold coins and firearms. At the beginning of 2010, the situation is far more complicated. A maximum of stimulating monetary policy has inflatert asset prices and brought the pricing of stocks back to historical average levels. Moreover, the future economic path uncertain. It remains to be seen how sustainable the current cyclical upswing is, and the danger of a new setback when fiscal policy must be tightened in 2011, is not insignificant. At the same time monetary policy in stimulating such a great extent that it creates fertile ground for speculation and new bubbles. Perhaps the equity and commodity markets continue ascension and shoot far above its fundamental equilibrium level, supported by the last year’s tripling of the base money supply in the United States? Where the road goes on, can hardly known with certainty. Our qualified guess is that the main trend in the stock market currently is sideways. A decreasing width of the staircase is a fatigue character. At the same time limiting the downside of an explosive liquidity climate.”
Here’s Norway’s best stock picker’s recommendations at Oslo Stock Exchange for the next month:
Fairstar – well positioned to win large contracts
· Fairstar is a Rotterdam-based offshore company, which has two modern heavy transport vessel, Fjord and Fjell.
· Tungtransport market has been weak this year, and this is expected to be the case in the next few quarters as well. The main problem is a surplus of tonnage caused by many converted tankers compared with reluctant oil companies.
· Despite challenging market conditions we are pleased Fairstar for two reasons.
· Firstly seems Fairstar with its modern and specialized vessels to be well positioned to win the long-term contracts at favorable rates in connection with several large development projects, including the giant Gorgon LNG project in Australia. A contract awards in connection with the latter may already this month and will then be a great price trigger.
· Then think Fairstar pretty low rated, even if sober assumptions be used. This is made manifest by a DCF value of 14.1 per share subject to a utilization of 70% and the rate of $ 70.000/dag. In comparison guides lead a utilization of 80% and the rate of $ 80.000/dag.
· The key figures are also attractive with a price / book-factor of 0.9 and P / E of 4.8 for this year falling to 4.6 next year.
· The main risk in Fairstar is that the contract coverage for next year so far is only at 30%. Fairstar need a contract coverage of at least 60% to rates of at least $ 60.000/dag to avoid liquidity problems.
· Although the risk is significant, rather we are against that risk / reward ratio is favorable in the stock. We therefore recommend the purchase and see a significant upside in any contract awards.
Opera – the global leader in the industry in a strong mega trend
· Opera Software is global market leader in browsers for mobile phones with a market share of 26.5% according to StatCounter.
· Terms of profit, the company is in a bad period as a result of a shift in strategic focus away from mobile phone manufacturers and to telecom companies. The cost this year will grow faster than revenues.
· We do, however, against the prevailing weakness is transitory and that the Opera’s new strategy will bear fruit in the longer term.
· This is supported by the fact that the company has signed several major contracts in the past indicating that demand remains strong.
· The positive image is supported by two insider purchases this month. Among other things, bought a board member shares for 1.25 million Euro to price 16.73. The person owned no shares previously.
· The past month downturn in the stock price also makes the site increasingly emerging as a oppkjøpskandidat. acquisition candidate. Of potential overtakere include Google and Microsoft. These are increasingly interested in technology and market position over the short-term profit growth.
· With a market capitalization of only 2.1 billion appears to Opera as a relatively cheap entry for industrial players who want a strong position in the market for browsers on handheld devices.
· As a result of the prevailing pressures on margins are not the key figures in the Opera typically attractive in short to medium term. It may be mentioned that the P / E is at 43 for 2010 falling to 16 in 2011.
· DCF suggests, however, that the stock is underpriced and pointing at a price of 23. Up there it is 32%.
· DCF along with the global market leadership, acquisition opportunity and an industry that is in a powerful mega trend means that we will land on a buy recommendation.
RCL – estimates and share price going up this winter
· The U.S. economy is improving slowly but surely. This is good news for RCL, as the company is entirely dependent on the American consumer.
· As a result of some price increases along with continued strong cost control, we expect that the EPS is picking up from $ 0.70 in the year to $ 1.87 next year. In comparison awaits a consensus EPS of $ 1.43 next year.
· We believe that consensus is too pessimistic and that the estimates together with the share price will pull up over the winter. Of factors that can contribute to this, particularly mentioned Carnival’s quarterly report in December.
· DCF flashes RCL as cheap since it implies a share price of 175
· The positive image is supported by key figures. A price / book-factor of 0.8 is low for a company in doupolaktig market with high barriers establishment. A 2010-P / E of 13.7 is not demanding for a deep cyklic company on the rise.
· The main risk in RCL posed by the American consumer and the price of oil.
· The last week, however, oil prices fell sharply, and it reinforces our faith in the stock.
REC – world record confirms strong technological position
· REC announced Friday that the company in collaboration with ECN has produced the world’s most efficient solar panels multikrystalline with an efficiency of 17%. Den The previous record was 16.5%.
· This news is positive because it shows that the REC still have a strong technological position in an industry where innovation is the most critical success factor in the long term.
· UN climate conference in Copenhagen ends this coming Friday. We note that several key State leaders, including President Obama, have changed their plans and will come to Copenhagen on Friday. This increases the likelihood that the conference will lead to something constructive.
· When it comes to the market conditions, may be mentioned that the demand has picked up sharply since the summer. Consensus indicates a growth in installed capacity of 40-60% in 2010 followed by a corresponding growth in 2011-2013.
· Although it still is likely to be overcapacity in soli industry in 2010, we believe that this is already inndiskontert in share prices.
· REC appears to be cheap in relation to our estimates. Compared with the industry traded stock with a discount of 11% rated out from 2010-2011-multiples. Furthermore, DCF suggests a share price of NOK 60.
· The key figures are not a deterrent. A price / book-factor of 0.4 and 2010-P / E of 18 is attractive for a company with a strong technological and market position in perhaps the world’s most promising growth industry.
· Keep in mind however, that the REC is not without risk. It relates substantial risk to both the long-term contracts as well as expansion projects that Singapore factory and Silicon III (Moses Lake).
Simrad – the strong order intake continues
· Simrad is a global niche supplier of electro-optical instruments, weapon improvement systems, vehicle systems and remote control systems for the defense sector.
· Company announced Monday about an order of 91 million from Kongsberg Gruppen. With this in place has Simrad an order book that covers more than one year’s estimated revenue.
· In light of the strong order situation appears not our estimates indicate a turnover growth of 12% next year as particularly aggressive.
· In the longer term, we expect that the Simrad strong capacity for innovation will ensure that the company has a growth rate well above the average in the defense industry.
· With a P / E of 8.7 for this year falling to 7.1 next year appears Simrad as one of the cheapest growth companies on the Oslo Stock Exchange.
· DCF implies a share price of 7.20. Relative pricing also flashes the stock as attractive. Add Kongsberg Gruppen its multiples as a basis, defense Simrad a share price of NOK 6,60 – 6,80.
· With an upside of 38-51% depending on the valuation method used, we recommend the difficult but the purchase of Simrad.
Related articles by Zemanta
- Bernanke Tells Senate Panel Rising Inflation Is Unlikely (nytimes.com)
- Alan Blinder: The Case for Optimism on the Economy (online.wsj.com)
- TSX looks to open higher on positive economic data (thestar.com)
- Dubai Bailout Helps to Ease Investor Concerns (nytimes.com)
- Weaker dollar, stronger returns (money.cnn.com)
- Secondary Sources: Value of Bankers, Fed and Bubbles, Paul Samuelson (blogs.wsj.com)
- Growth or bust? (news.bbc.co.uk)