Do Not be Afraid to Hold Cash for Now - Plus 6 Good Value Shares

by Jason Fittler

Another financial year is over, while all of the financial planners and super funds take a well earned rest, we need to focus our attentions on what to buy. As you would be well aware over the next couple of months we expect to see a market correction, which will provide us with some good buying opportunity. Below I have touched on a number of shares which I believe are a good value.

Keep in mind that I am not trying to pick the bottom of the correction, merely looking to build holdings in good quality stocks at fair prices. There is more of the Bull market to come so let's get set for the next rise.

Woolworths - we have a price target on the stock of $32.50 it is currently trading at $26.65 which gives it an upside of 11%. This is a stock which never looks cheap but is the likely winner of further consolidation in the retail industry. I would look to buy on any further weakness.

Suncorp - this stock has been hit hard recently with expectation of claims from the recent storms in NSW, the claims are expected to lower forecast earnings. We have lowered our valuation down to $23.13 and have a price target on the stock of $21.97. The stock is currently trading at $20.17. I expect there to be more weakness in the stock as the effect of the NSW storms on the company bottom line become clearer. Buy on further weakness.

Lend Lease - we are expecting to see a solid outlook for the company's construction operations in all markets including upside from the recovery in the Australian residential market. Our price target is currently $21.70 with the stock trading at $18.37. This is an upside of 17%. I would look to buy some stock at the current level and add to the holding on any further weakness.

Platinum Capital Ltd - this is a listed investment company which we have been in and out of a number of times. For most clients we exited the stock around the $2.50 level back in October 2006, the stock is back down at $2.00 and touched $1.90 on Wednesday this week. I would look to buy this stock again around the $1.90 mark. The company has a net asset back of $1.68.

Macquarie Leisure - the current weakness in the price of this stock has provided a buying opportunity. We have a price target of $3.59 which is 10% above the current trading price of $3.21. This stock also pays a nice dividend of 5.2% although it is not franked.

Wesfarmers - we started buying this stock back when they first announced their takeover bid for Coles, this is becoming closer to being a reality every day. Although the price has run over the past week I would still look to start building a holding in this stock. If/when they are successful with their takeover bid for Coles this will be a core portfolio stock which every index fund will have to hold. This will provide good long term support for the stock, it also has a great yield of 5% fully franked at the current price.

I would still also look to buy stock such as BHP, RIO Tinto, Woodside, Macquarie Bank, Babcock and Brown, Caltex, MFS, ANZ, Westpac, Newcrest, Paladin, QBE and Zinifex limited.  However, I would be looking for the overall market to correct to below 6000 points before I started to move on these stocks.

I will continue to monitor the market and update you when I think there are good buys in the market. If you would like to discuss any of the above stocks with me or your adviser please contact us on 07 4771 4577.