SHARES: Bluechip buys emerge from the bloodbath

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On Tuesday morning the Australian share market looked like it was in free fall. It steadied after lunch but investors’ nerves are shattered. But while the ‘herd’ is scrambling to sell there are some excellent buying opportunities.

 

Why buy now?

 

Thanks to the market bloodbath, the S&P 500 is down almost 20%. This means there is an opening not to be wasted: the second stock market crash in the space of just three years means opportunities like never before for calm, focused and long-term investors.

 

The experts:

 

Experts are saying that now is the best buying opportunity in the share market for two years. The lesson from the GFC was that markets can free fall, but they can also sky rocket. Blue-chip bargain stocks are there for the taking.

 

Michael Kodari from Kodari Securities says there are some excellent buying opportunities in the domestic share market at the moment.

 

In particular, he thinks Medusa Mining represents excellent value for money. “It is a gold miner with one of the lowest production costs, no debts and a return on investment of 37%,” Kodari said.

 

“With gold prices going up Medusa has one of the best tenements in the world in the Philippines and with a current price of $6.65 represents excellent value.”

 

His other pick is McArthur Coal, and Kodari says he is aware of Chinese private equity clients wishing to purchase Australian coal mines that will underpin the future value of coal stocks.

 

On the shelf: potentially cheap stocks to investigate

 

BHP Billiton
Market price: $36.50
Year high: $49.80
Year low: $36.94
Target: $55.00

Risk: Low

 

Medusa Mining
Market price: $7.10
Year high: $8.71
Year low: $3.63
Target: $9.80

Risk: Moderate

 

Macarthur Coal (MCC)
Market price: $15.00
Year high: $15.94
Year low: $10.09
Target: $18.00

Risk: Low

 

Woolworths
Market price: $25.25
Year high: $30.18
Year low: $25.21
Target: $31.00

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