Question: My financial advisor has purchased shares in Linc Energy and Northern Star Resources for me on behalf of my SMSF. To date both stocks are showing a loss on paper. I would appreciate your thoughts on these stocks.
Answer (By Paul Rickard): They are “interesting stocks” for an SMSF portfolio – so I hope that they are part of a more diversified portfolio and consistent with your investment objectives. If they are not, get a new adviser.
I don’t like gold, so only in exceptional circumstances would I contemplate buying a second tier gold producer. Northern Star is not well covered by the analysts – Macquarie recently instigated research on it, rating Northern Star as an “outperform” with a target price of $0.93. This is not that far from its current price of $0.86 – although a fair way from its 52-week high of $1.53. The company is forecasting to generate net cash this year, and pay a fully franked dividend of 3.5cents – so maybe this puts a floor on the price.
None of the major brokers research Linc Energy – which says something about the stock. I also can’t shed any light, apart from noting that it is pretty volatile. It is certainly in the ‘speculative’ category.
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