Woolworths Limited (WOW) operates supermarkets, specialty and discount department stores, a liquor business and electronics stores throughout Australia.

The company manufactures processed foods, exports and wholesales food and offers petrol retailing. WOW’s hotel operations include pubs, food, accommodation, and gaming.

1Q13 Sales

WOW’s 1Q13 sales continued to show an improving sales trend. Sales from continuing operations were $14.8 billion for the quarter, up 4.7% on the prior corresponding period.

The supermarket division (including liquor), which accounts for ~88% of sales, reported a 3.4% rise in sales to $12.99 billion.

Areas growth

While a majority of WOW’s 1Q13 sales were good without being great, there were a few standout divisions. Big W reported like-for-like (LFL) sales growth of 3.4%, showing the success of the group’s recent marketing campaigns.

The group’s newly entered Masters Home Improvement segment showed spectacular growth, with 62.2% increase in sales. Most of this was driven from seven new store openings in one quarter and greater brand recognition.

The company plans to open 150 stores over the next five years, with at least 30 stores to be opened by the end of FY13. We believe that exposure to this sector can only be beneficial to WOW’s earnings in the long run.

Looking forward

A real solid sales trend has begun to emerge for WOW and 1Q13 sales may continue this positive trend. Another fact we like about the group is that such a large proportion of its sales come from the more reliable supermarket division, as this provides more consistent earnings.

WOW’s ability to generate cash will become increasingly important to fund the Masters Home Improvement expansion and we believe this will be beneficial to WOW going forward.

This article was distributed to our members on January 14th, if you would like further information you can sign up for FREE 7day recommendations and access all our research files on not only Woolworths but all our current trading ideas. Simply click here and starting trading today.

BHP Announces Iron Ore Jumped 14%

Blue chip stock BHP announced that its iron ore production jumped by 14% to 37.9 million tonnes for the March quarter.

The company said it was still on track to produce about 159 million tonnes of iron ore, despite the unusual wet season in the Pilbara.

Production of petroleum products soared 58% to 56.5 million barrels of oil equivalent, helped by last year’s shale gas buys in the US.

It wasn’t all good news for the mining giant, with the company cautioning that the output of steelmaking coal may be dented in the coming quarters due to a labour dispute in Queensland.

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Stocks To Buy: Ausdrill (ASL)

Ausdrill (ASL) is an international mining services group who provides specialist drilling services to the mining sector. The company’s operates mainly in Australian and Africa, but does have offices in the United Kingdom.

ASL has a five main business segments; Contract Mining Services Australia, Contract Mining Services Africa, Manufacturing, Supply and Logistics and Diamond Communication.

Over the past few years, ASL has made a conscious decision to diversify its business and offer more services then its traditional, drill, blast and exploration drilling business.

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The diversification has seen the company being able to become ‘the complete service company’ to the mining industry in both Australia and Africa.

ASL continues to able to win key contracts, with an aim to make these contracts as long-term as possible for income stability.

Projects

The company has completed a raft of acquisitions over the last few years, in line with their strategy to become ‘the complete service company’.

The last acquisition was of Connector Drilling in early 2011, with the deal increasing the company’s presence in Western Australia and in particular the growing Pilbara region.

ASL has also been able to secure key contracts from some of the biggest miners in Australia, including Fortescue and BHP Billiton.

The contracts are not all Australian-based either, with ASL winning several gold contracts in African.

As at the company’s last update, ASL had approximately $1.84 billion work in hand for FY12 onwards in the mining services business alone.

With the mining sectors growing in Australia and across Africa, ASL is in position to take advantage of this growth and build upon its already strong relationships.

Financial Position

ASL has achieved solid growth over the last few years and profits are hitting record levels.

Profit jumped 52% to a record $73.3 million in FY11, on the back of 32.3% growth in revenue to $834.6 million.

The company provided earnings guidance in December, expecting to report a first-half profit of $48-$50 million on revenue of approximately $500 million.

OneSteel Ltd (OST) is an Australian manufacturer of steel and finished steel products and a leading metal distributor which is listed on the Australian Stock Exchange.

OST, which was spun out of BHP in October 2000, markets products used in the construction, manufacturing, housing, mining and agricultural industries.

OneSteel announced a 1H FY12 net loss of $74 million, swinging from a $116 million profit a year earlier.

The results were marred by a $130 million writedown on the groups LiteSteel business in the Australia and the US.

The group said that it expects sales of approximately two million tonnes in 2013, after its Peculiar Knob project begins operations in the December quarter of this year.

The company declared an interim dividend of $0.03 a share, unfranked.

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At the start of a new year traders and investors alike invariably look to the potential that the new horizon brings.

After a tumultuous 2011, this year that sentiment is even more pronounced as market participants put the last 12-months in their rear-view and look to better times ahead.

At Australian Stock Report we don’t particularly care for long dated predictions about the market as a whole – too much can change too quickly.

We are prepared however, to outline a few stocks that will make for interesting reading in 2012.

Below is a list of stocks to watch in 2012 and a brief outline as to why we think so.

QR National (ASX:QRN) / Asciano (ASX:AIO) – Both companies operate in the transportation industry and are highly leveraged to the mining sector. While they are in competition with each other, both can prosper with the mining boom likely to drive industry revenue. QRN and AIO are likely to experience strong growth from the Queensland area as the state’s coal output moves back into full swing after last year’s floods caused havoc with production.

ANZ (ASX:ANZ) – Our bank of choice is ANZ. While we can’t see an extreme decoupling in price between the big four over the next year, ANZ is our preferred exposure to this sector. ANZ has the second lowest P/E based on current earnings and has a dividend yield approaching 7%, which should provide some support for the stock at this level. The company also has the most exposure to the growing Asian region and one of the lowest exposures to the slowing domestic residential market.

BHP Billiton (ASX:BHP) / Rio Tinto (ASX:RIO) – These mining giants are poised for growth in 2012. Both companies were weighed down last year as the market factored in the effects of a possible hard landing in China. It is becoming more evident however, that any slowdown in the Chinese economy will be akin to a soft landing instead. The other factor that could buoy the mining giants is increased commodity prices due to the likely introduction of further monetary stimulus by the US Federal Reserve.

WorleyParsons (ASX:WOR) – Worley’s provides professional engineering and management services to the energy, resources and complex process industries. The company has significant leverage to the energy sector, specifically through its hydrocarbons (compounds founds in crude oil) division. The company will benefit from any oil supply/demand imbalance that drives up prices. Indeed, some analysts are predicting the price of oil will increase dramatically due to the political unrest in the Middle East. Higher oil prices will encourage the big oil companies to ramp up capital expenditure to the benefit of WOR. The company also has demonstrated an ability to land contracts with the major oil players, evidenced by its recent contract win for the Chevron project in Indonesia.

Saracen Mineral Holdings (ASX:SAR) – On the smaller side of the market, Saracen is a mid-tier WA gold producer that was added to the S&P/ASX 200 on the 28^th of December, 2011. This company has forecast gold production of between 120,000 -130,000 ounces of gold a year, which was reaffirmed in a recent update. Saracen is also trying to expand its business with $35 million of capital expenditure planned for the current financial year. The capital expenditure is substantial for a company of SAR’s size, but a strong net cash position of $58 million significantly reduces the funding risk.

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BHP Billiton (ASX:BHP) is an international resources company.  The Company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.

Blue chip stock BHP, today announced that its latest quarterly iron ore output increased 22% in the December quarter compared to the previous quarter.

BHP’s operations in Western Australia’s Pilbara region recorded record production on an annualized basis, as the company expanded its infrastructure base in the area.

The Melbourne based company said that it expects full-year production to marginally exceed prior guidance of 159 million tons per annum.

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OneSteel Ltd (ASX:OST) is an Australian manufacturer of steel and finished steel products and a leading metal distributor which is listed on the Australian Stock Exchange.

OST, which was spun out of BHP in October 2000, markets products used in the construction, manufacturing, housing, mining and agricultural industries.

OneSteel announced today that it will write-down $150 million of the value of its LiteSteel Technologies business due to weak residential construction activity.

The company said that the financial statements for last six months of the year will include $90 million of the write-down.

OneSteel also announced that it will sell its Piping System business for $67 million to US based McJunkin Red Man.

Together with the sale of related property investments the company expects proceeds of approximately $100 million.

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Westpac Banking Corporation (ASX:WBC) is Australia’s oldest bank operating a significant banking franchise in Australia and New Zealand.  WBC is considered an ASX Blue Chip Share. The company has balanced exposures to retail, corporate and institutional sectors.

Westpac has been one of the more acquisitive banks domestically with successful takeovers of Bank of Melbourne and Challenge Bank and Trust Bank in New Zealand. More recently WBC has aggressively expanded its wealth management activities with the acquisition of Rothschild Australia Asset Management, BT Funds Management and Hastings Funds Management.

Westpac today held their AGM where it warned that the European debt crisis will continue to impact the price and possibly the availably of funding to Australia’s banking sector.

CEO Mrs Gail Kelly said the outlook for the global economic outlook remained mixed with Australia not immune to these headwinds, with growth slowing and consumer and business spending cautious.

Mrs Kelly also hinted that WBC may not pass on future interest rate cuts to borrowers in full, citing the impact of higher funding costs on interest rate margins.

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If you invest in small-caps without conducting proper research, then you might as well be throwing darts at the proverbial dartboard.

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BHP Billiton (ASX:BHP)  has a global portfolio of high-quality assets, with more than 100 operations in 25 countries.

BHP held its AGM today, with CEO Marius Kloppers outlining challenges for the company on the back of economic uncertainty and equity market volatility.

Mr Kloppers told the AGM that despite short-term challengers the long-term outlook remains unchanged.

BHP’s strategy remains to invest through the economic cycle, with a plan to invest US$80 billion over the next five years on its mining and petroleum assets.

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