stock pick of the week., page-14

asl very oversold In my view ASL is very oversold. ASL focuses on longer term relationships to balance exploration drilling and blasting. This means it smooths out the cycle. Recent long term contracts have been signed with BHP, KGCM, Newmont, Gold Fields etc. The capital has been invested to service these projects for the next 5 plus years. In addition, ASL has a strong balance sheet with acquisitions expected in the near term.

Without the full effect of the return on the recent capex or the capital raising, ASL is still on a 2006 PE of 8x with earnings forecast to increase.

Have a look at the run of BDL - I would rather be on ASL at current prices (and I am so biased).

Have a look at Boart Longyear's acquisition of Avatar's drilling operations or Macquarie Bank buying into Boart Longyear - all evidence of medium term good market conditions. There has been far too much reaction to a short term drop in gold prices. Ausdrill has very limited exposure to exploration drilling by juniors in any event.

In my view ASL is at least 15% undervalued, with future acquisitions potentially adding significant value.

Just my opinion
Monty