Stocks to watch: Fletcher's ascent, Mainfreight outlook

Wednesday 6th May 2009

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Federal Reserve Chairman Ben Bernanke said the US housing slump may be near its bottom, stoking optimism the recession in the world’s largest economy will end this year. Bernanke’s comments came as the Institute for Supply Management’s index of non-manufacturing businesses rose to a seven-month high 43.7, edging closer to the 50 level which is the cut off between contraction and expansion. In New Zealand, Fonterra delayed its latest online milk powder auction.

Fletcher Building (FBU): The building materials company gained 0.4% to $6.93 yesterday, the highest since early October, amid optimism the US recession is becoming less severe. The company’s $100 million share purchase plan closed oversubscribed yesterday and would be scaled back. A top-up offer of $20 million wasn’t completely subscribed.

Mainfreight (MFT): Forsyth Barr analyst Rob Mercer cut his forecast for the transport company’s 2010 net profit to $36.3 million before items from an earlier estimate of $43.9 million, the ShareChat website reported. “The impact from the contraction in economic activity is unavoidable in the short term but also provides substantial opportunities for Mainfreight and it is the latter point that we believe the market should focus on," he said, according to the report. The company reports 2009 earnings today. The shares rose 3.3% to $4.70 yesterday.

New Zealand Oil & Gas (NZO): The shares rose 5 cents to $1.44 yesterday. Crude oil slipped from a five-month high amid speculation US Energy Department figures due tomorrow will show rising inventories of crude. Crude oil for June delivery fell 1.2% to US$53.84 a barrel on the New York Mercantile Exchange. Copper for July delivery fell 2.8% to US$2.0835 a pound.

NZX (NZX): The stock exchange operator gained 4.6% to $7.51 yesterday. The company yesterday said it is upbeat about the amount of capital raised this year, which has boosted revenue in the face of weak trading and a dwindling market. More than $1.7 billion of total capital was raised in April, as companies including Sky City Entertainment, Freightways and Nuplex Industries tapped investors to bolster their balance sheets.

PGG Wrightson (PGW): New Zealand commodity prices posted their strongest monthly gains in almost two years, with lamb gaining 6.4%, beef up 3.2%, venison 1.6%, dairy 3.1%, and skin and wool rose 2.3% and 1.3% respectively. The nation’s largest rural services company was unchanged at $1.40 yesterday and has gained 8.5% this year.

Rakon (RAK): The maker of navigation system components jumped 14% to $1.50 yesterday, the biggest gain on the NZX 50, amid optimism the global economy has reached its low point.

Businesswire.co.nz

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