Recommendations

An article from the Intelligent Investor reckons Telstra is a Long Term buy. The Telstra share price is hovering at absolute lows and it is tempting to buy into the stock on the principle of buying stocks cheap in the hope for selling it high. But according to the subscription service that now is the opportunity to get into this blue chip stock. They did recommend the stock earlier in October 2005 long Term Buy at $4.22. People who bought it at those levels must be hurting though. They also recommended the stock in February 2006 at the price $4.06.

Telstra fell to record lows during this week, hitting $3.66 - just 26 cents above that T1 investors paid in 1997 and about half of what investors paid for T2. And you think the Aussie Government is going to offload this ailing stock to T3 in during the coming year? Who knows? But there is one thing I know - it is highly unlikely for this stock to see some miracle recovery over the next year.

Macquarie Research Equities (MRE) have conducted an extensive analysis of stocks that are at risk of earnings downgrades due to increasing cost pressures. While softer revenues are a problem, the real concern lies with accelerating cost growth that is effectively eating into company margins. Against this backdrop, MRE believe that rising costs present an increasing risk to company Earning Per Share (EPS) growth forecasts for FY06.

In the view of UBS, 2006 will be a story of two halves for the Australian economy, where the first six months is likely to produce better results than the second six months.

The broker expects the current moderate recovery in economic growth to continue for the next few quarters, but the fact high commodity prices have been masking issues for the domestic economy is likely to be revealed in the December half next year.