Stock Roundup - BHP, RIO, Babcock and Brown (BNB), Worley Pasrons (WOR) and Centro (CNP)

One stock that I have written about a number of times is Babcock and Brown (BNB) - Australia's second largest investment bank behind Macquarie Bank (MQG). I own this stock (bought @ $27) and even thought it is trading around $15, I am still holding on to it because I believe it is a solid company, well financed and a good long term growth stock. It has been caught up in the global maelstrom of the credit crisis and because it's model uses a lot of debt to fund projects (which is repaid via the steady stream of income these projects generate). I really do believe it is going to be a $40 - $50 stock in 3-5 years time. This was demonstrated by recent news that 25 banks have backed increasing Babcock debt facility by 19 percent to A$2.8 billion. The firm said the renewal, foreshadowed in its 2007 results, reinforced the strength and flexibility of its balance sheet.

``That 20 basis point increase in cost looks to be a pretty good result for them given the tension in markets is clearly very extreme,'' said Adam Donaldson, head of debt research at Commonwealth Bank of Australia in Sydney. ``The ability to lock in funding for a minimal cost......is a major positive.'' The increased cost of funding its debt facility has been offset by a reduction in the cost of drawing on credit in the U.S. and Europe, where benchmark lending rates have dropped. I still think BNB will have some volatile times ahead and is actively trying to restructure or sell a number of the funds and trusts it manages. So any sustained appreciation in the share price won't start till later in the year. So either put it on your watch lists or hold on to what you have (like me) and enjoy the ride.

Onto other company news, what is happening with the BHP and Rio Tinto (RIO) merger? Well, RIO has basically rejected BHPs revised offers. saying a merger does not increase shareholder value. Personally, I think that this merger will not go ahead and if it does, it will take a long time to play out with BHP having to end up paying a lot more than planned. If you want to benefit from this potential transaction, buy RIO shares.

Worley Parsons Ltd., (WOR) Australia's largest engineering company, has long been one of the stocks on my buying watch lists. I just haven't found the right time to get into it. Either it rose too much, or with the credit crisis fell too fast. However, it has continued winning contracts and the underlying business is strong. JP Morgan reaffirmed its ``overweight'' rating on the stock, which enjoyed a 10% share price rise this week. JPMorgan said the company was ``well placed'' to deliver strong earnings growth for at least the next few years. ``The business is highly cash generative and seems likely to continue to deploy capital to strategic acquisitions to complement its strong underlying organic growth,'' the March 26 note said. ``We believe the current price to be an excellent opportunity for investors to get exposure to a high-quality, long-duration growth stock.'' At $34 the stock has dropped about 40% from its high's. I am going to be watching it closely over the next few weeks and look to buy if it drops below $30.

Centro (CNP), previously a ASX 50 stock and now a speculative play I reviewed a couple of weeks ago, has now got more time to repay monies owed to the syndicate of Australian banks behind the embattled group's banking facility. They will extend the debt facility until September 30, contrary to speculation that they might pull the plug when it expires on April 30. At 0.25c it looks an even better "punt" now - providing you believe it will make it through the debt ridden mess it is in now.

Finally, the Australian dollar advanced to the highest levels in a week, reversing part of last weeks steep falls, as rising prices of metals the nation exports boosted the outlook for economic growth. The local dollar is headed for a quarterly gain as traders raised bets the US Federal Reserve will keep cutting interest rates, increasing the appeal of Australia's bonds. ``Metals prices are up so that's supporting the Australian dollar,'' said Richard Grace, chief currency strategist at Commonwealth Bank of Australia, the nation's second-largest. ``It's difficult to be bearish on the Australian dollar while the U.S. dollar continues to soften.''