top 10 stocks under 1 dollar, page-7

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Note POZ is number 10 See the comment re phosphate & pot

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Are you brave enough to take a punt?
By Andrew Carswell | July 06, 2008 12:00am
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JUST how much are you willing to lose? It's an odd question, but an entirely necessary one to consider before throwing your hard-earned cash into the unforgiving sharemarket whirlpool.

In fact, it's the first question most financial advisers and brokers will ask virgin investors.

And, when it comes to investing in speculative stocks, you have to be sure you've answered honestly.

Speccies, as they're known in the industry, are usually little-known companies that have the potential to grow into something huge, with generous dividends and table-thumping profit growth.

But there's also enough uncertainty surrounding the operation to put a lid on the share price, for now.

Analysts who spoke with The Sunday Telegraph last week said most speculative investors lost more often than they won.

But when they do succeed, those losses combined can pale into absolute insignificance.

Just ask the loyal investors who backed Fortescue Metals Group in from a micro-cap, with shares worth a few cents, to a monstrous iron-ore giant that has pushed founder Andrew Forrest to the top of Australia's rich list.

And even in the current gloomy bear market, Fat Prophets analyst Greg Canavan believes investors should include one or two speculative stocks in their share portfolios.

"If you're taking a long-term view, now could well be a decent time to take a position,'' he says.

"The higher the risk, the higher the potential rewards.

"But we suggest people have less than five per cent of their portfolio geared towards the speccie end of the market.''

Here, in no particular order, are some of the best speculative stocks under $1, as suggested by the analysts.

The quoted share prices are those on July 3 this year.

1 CREDIT CORP GROUP (CCP) 84.5c

Barely a year ago, tagging this stock as speculative would have seemed comical.

The debt-management group was a market darling, and its share price had soared above $12.
But debt soon became a dirty word when global credit markets squeezed tighter than a bear hug.

Credit Corp collapsed spectacularly, with two vertical descents that saw it touch a forlorn low of 59c in March.

Last week, the spark that many thought had been extinguished flickered, thanks to a timely debt renegotiation.

"It has renegotiated all its debt and is going to make a profit of about $10 million and pay a 2c dividend,'' Aequs Securities analyst Rick Klusman says.

"I think it will be a slow creeper coming back.''

2 SOUTH BOULDER MINES (STB) 25.5c

The directors of South Boulder Mines saw the writing on the wall earlier than most.

They forgot about gold and nickel and went hunting for phosphate and potash, securing the Lake Disappointment East Potash project -- conveniently located next to Reward Minerals' JORC-compliant, 27-million-onne potash resource.

A classic case of "near-ology'', or a potential windfall?

Wise-owl analysts believe the latter and say the market's insatiable appetite for fertiliser stocks will drag South Boulder into the stratosphere if it delivers a resource.

"It has a similar story to Reward Minerals, which has gone absolutely ballistic in the past few months,'' Wise-owl equities analyst Imran Valibhoy says.

"It's still in the early stages, but we feel these guys really do have the potential to become quite a big player in the market.''

3 CENTREX METALS (CXM) 37c

Were it not for some angry fishermen, iron-ore explorer Centrex Metals' share price would probably be in uncharted waters.

The company is on the brink of making the transition from explorer to producer through
its Wilgerup ore deposit, in South Australia.

But peak fishing bodies in that state are fighting the mine, saying dust from the project will reduce the quality of commercial fishing in the area.

As a result, Centrex Metals' share price remains stagnant under 40c, but it could explode if a reasonable resolution with the locals can be found.

"At this stage, they expect iron-ore production to begin late this year and that the company will begin shipping in 2009,'' Wise-owl's Imran Valibhoy says.

"Once they get over this minor hurdle, we believe there will be a re-rating of the share price.''

4 HILLGROVE RESOURCES (HGO) 30.5c

This budding miner finds itself in a cushy position.

Although it is progressing with the financing of its Kanmantoo copper project, near Adelaide, its share price has been pushed along by the raging success of Eastern Star Gas, in which it has a 22.6 per cent stake.

That stake alone is worth more than Hillgrove's market value.

Investors, therefore, are getting the Kanmantoo copper project and another 29.1 per cent stake in InterMet Resources for absolutely nothing.

"It's a compelling scenario,'' says Intersuisse analyst Paul Gooday, who last week put a ``buy'' recommendation on the stock.

5 CLOUGH (CLO) 68c

This mining-services company appears to be in the right sector at the right time.

Clough predominantly provides engineering services to the oil and gas industry, a bubbling sector that has skyrocketed this year.

The projects appear to be coming thick and fast, including a $200 million contract to install Apache Energy's offshore Reindeer Gas Field development and a lucrative contract to build
a jetty at Woodside Petroleum's Pluto LNG project.

"There are a number of very large gas projects that are taking place in Australia and Clough is well placed to pick up contracts,'' Commsec small caps analyst Sean Cooney said.

6 KEYBRIDGE CAPITAL (KBC) 72.5c

It may be a risky business dishing out cash to property, aviation, shipping and infrastructure companies at the moment, but Keybridge Capital seems to be not only holding steady, but progressing.

The mezzanine finance lender updated the market this week, claiming its investment portfolio remained firm at $421 million and its 2008 profit guidance was unchanged.

Commsec's Sean Cooney is a firm believer in the stock, despite its share price being well off its 2007-08 highs.

"They are a geared entity and are lending at a riskier level than what a bank does,'' Cooney says.

"But the key to their business is being able to have a strong credit process and knowing when to invest, and when not to invest, in a business.''

7 MUNDO MINERALS (MUN) 59c

This was meant to be the year Mundo Minerals sailed right through the $1 mark to blue sky.

For some strange reason -- given the fact that it moved from explorer to producer -- the gold miner's shares have halved from their February highs.

Mundo Minerals' Engenho gold project, in Brazil, is expected to produce 30,000 ounces of gold a year from a resource base that has significant potential for expansion.

Add the developing joint-venture Torrecillas gold project, in Peru, and the stable looks handsome, Fat Prophets analyst Greg Canavan reckons.

"Everything is on track, the operations came in under budget -- which is unusual for emerging developers -- and they haven't disappointed,'' Mr Canavan says.

"But the market has knocked their share price around a bit. It's a great story, and it has some exploration licenses as well.''

8 ST BARBARA(SBM) 34c

Investors reacted harshly when St Barbara directors went to market to secure funds to develop their Gwalia gold project.

The share price subsequently dropped from a March high of 91c to well under 40c.

"Obviously, if you go after cash in this market it's going to cost you, so their share price has more than halved,'' Greg Canavan says.

"But if they can get the project up and running, the current 36c will be a very cheap price.''

9 ABC LEARNING CENTRES (ABS) 88.5c

Many investors wouldn't touch this child-care giant with a barge pole. Negative publicity, credibility concerns over its guru Eddy Groves and a tangled web of debt concerns are just the beginning of ABS's problems.

Not to mention a share price that has tumbled from above $5 late last year.

"But where there is any level of panic selling, there is always room to make a quick buck,'' one Melbourne analyst told The Sunday Telegraph.

"I think they are a good punt at the moment,'' the analyst, who did not want to be named, said.

"They've fallen so much, and the Government has admitted there is nothing it can do to stop them lifting their prices 11 per cent.''

10 PHOSPHATE AUSTRALIA (POZ) 57c

Timing is everything. This tiny company made its ASX debut last week to much fanfare, thanks to the market's love of anything that even looks like phosphate.

It has large land holdings throughout the rich Georgina Basin, bordering the property of Minemaker's JORC-compliant phosphate resource.

"It's early days, but we love anything to do with potash and phosphate at the moment,'' the Melbourne analyst says.