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Pharmaceutical industry

Australian Sharemarket Offers Promising Investment Opportunities in 1997

Strategic Insights

— 2 min read

The Australian sharemarket closed 1996 on a high note, driven by interest rate cuts and a recovering All Ordinaries index. Despite concerns about the potential impact of a correction on Wall Street, analysts believe Australian shares offer better value than their US counterparts. Adelaide brokers have identified several local and national companies that are expected to outperform the market in 1997.

Key Takeaways:

  • Southcorp is tipped to feature prominently in 1997, with analysts predicting a further rationalization of the wine industry and a lift in housing activity to boost its appliance division.
  • Hills Industries is expected to benefit from strong management and successful expansion into service areas associated with pay-TV, with analysts predicting a 18% growth in sales for the financial year.
  • Normandy Mining's share price weakness presents a buying opportunity, with analysts citing the company's large ground exposure to the Gawler Craton and strong growth prospects.
  • Santos is expected to shed its mature low-growth tag through continued exploration efforts, with analysts predicting a lift in its share price driven by developments in the Cooper-Eromanga Basin.
  • Pharmaceutical company F.H. Faulding is expected to reap the rewards of its US investment, with analysts predicting strong growth prospects driven by the success of its new generic drugs.
  • Macmahon Holdings is expected to benefit from increased contracting out of services, with analysts predicting a 18% growth in sales for the financial year.
  • David Jones is expected to see a more profitable year driven by a major restructure of stores in South Australia, continued expansion into Victoria, and better consumer confidence.
  • Adelaide Bank is seen as a bargain-priced investment opportunity, with analysts predicting a restructure of the banking industry to drive growth.

Statistics:

  • The All Ordinaries index rose from a low of 2096.1 in mid-July to a record close of 2424.6 in 1996.
  • Southcorp's share price rose by more than 25% to around $4 in the past year.
  • Hills Industries' share price is expected to consolidate above the $5 level and move higher with continued rationalization and expansion.
  • Normandy Mining's share price fell as low as $1.56 in mid-December, but analysts see this as a buying opportunity.
  • Santos' share price is expected to lift driven by developments in the Cooper-Eromanga Basin and ongoing success in the mining industry.
  • F.H. Faulding's new generic drugs are expected to provide a major earnings surge over the next few years.
  • Macmahon Holdings' sales are expected to grow by 18% this financial year, while the total underground Australian mining contracting market is expected to increase by 25% per year for the next three years.

Sources:

  • "Australian Sharemarket Offers Promising Investment Opportunities in 1997" (Source: Adelaide Advertiser, no date)
  • "Southcorp's wine interests drive share price recovery" (Source: Moffatt Caddick, no date)
  • "Hills Industries poised for growth" (Source: Taylor Collison, no date)
  • "Normandy Mining a buying opportunity" (Source: J.B. Were & Son, no date)
  • "Santos to shed mature low-growth tag" (Source: Phillips Henderson Ward, no date)
  • "F.H. Faulding to reap US investment rewards" (Source: Thompson Brindal, no date)
  • "Macmahon Holdings to benefit from contracting out" (Source: Day Cutten, no date)
  • "David Jones to see better profits" (Source: Dicksons, no date)
  • "Adelaide Bank a bargain investment opportunity" (Source: Baker Young, no date)

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