The Australian share market is having a dream start to the 2015 calendar year, outperforming many developed countries. The question now comes, where should you invest your cash?
Term Deposits vs Property vs Shares?
The RBA dropped the benchmark rate to an all-time low in February and economists everywhere are predicting they're going to go lower before they go higher. This essentially rules out term deposits and bank accounts, property is expensive and illiquid, so shares are the obvious option for many investors.
We've just come out of the mid-year reporting season, so analysts now have the most up-to-date information about Australian listed companies. Following fairly impressive reporting seasons, analysts believe Qantas Airways Limited (ASX: QAN), Harvey Norman Holdings Limited (ASX: HVN) and Nine Entertainment Co Holdings Ltd (ASX: NEC) are all compelling options to buy right now.
Qantas reported its best half-year result for four years, delivering underlying profit before tax of $367 million, higher than the average analysts' forecasts for $339.3 million. Analysts believe that better-than-expected savings from the group's transformation program and the potential for a share buyback this year should see the group continue to outperform the market.
Harvey Norman shares rose to their highest level in five years after management reported net profit after tax for the six months to December 31 2014, of $142 million, up 27% and ahead of most expectations. The group's east-coast dominated footprint is expected to result in sales increasing with home construction ramping up over the next 12 months.
Nine Entertainment shares jumped the most in its listed history after earnings fell less than expected and the company announced a $180 million share buy-back. Analysts are typically divided on the mixed success of this year's TV show line-up but see earnings improving over time.
Time to Buy?
I'm not convinced that any of the companies above represent good value at the current price. All three operate in extremely tough industries that they don't dominate.
