If you read nothing else in this month’s issue of Australian Edge, if you simply want to check out from the library stuff, cut to the chase and start placing orders, we’ll honor the word as well as the spirit of “In Brief” by offering this as thorough enough advice before you hit the Portfolio tables and How They Rate looking for stocks:

Don’t pay more than our “buy under” target for any stock.

The optimal way to use Australian Edge is to get your Saturday morning e-mail notification, download the issue and identify opportunities that fit with your risk profile and investment objectives, with an eye on placing orders Monday morning, live with your broker, or even over the weekend, in time for the Australian Securities Exchange’s open in Sydney on Monday morning.

Friday’s semi-swoon for equities markets brought many of our favorites back within range or even under our targets. As of Friday evening, Feb. 10, 10 of 18 Portfolio Holdings are at or under their respective buy-under targets, brought back by the strange, sudden realization that not many of the afflictions hampering global growth and a full-blown market rally remain in place.

The good news is we know the pressure points: Greece, Spain, Europe, Chinese growth. The question of Israel striking Iranian nuclear facilities is a matter of “when,” not “if,” if you consult certain hawkish quarters. And soon we’ll add the returning specter of a debate over the US debt ceiling, which will be all the more colorful because of November’s stakes.

In an exchange with a reader in the “Comments” section under a previously published article earlier this week I noted that we were in the process of updating How They Rate and that we would publish results with the February issue. Apart from wanting to make readers aware of the availability of the “Comments” feature, I wanted to return to part of my posted reply.

I noted that our process would likely result in “very likely…several updated ‘Advice’ columns.” One implication, of course, is that the recent rally would cause some reevaluation of buy-under targets for our Portfolio Holdings, in particular, as well as the rest of the 100-plus companies we track in How They Rate.

We have reviewed each member of the coverage universe leading up to publication of the issue. But, except for a couple instances, including this month’s Sector Spotlights, we lack sufficient information to support target changes, apart from what seems a significant shift in sentiment.

We will, however, shortly have a lot of information, as an earnings season that has gotten underway slowly will turn to a torrent of fiscal 2012 first-half numbers for most of the Australia-based companies we cover. Some have slightly different fiscal calendars and reporting schedules, but for the March issue we should know whether recent price increases are justified by business quality.

What you can do right now is enter a “buy limit order” for Portfolio Holdings that you don’t already own or for How They Rate companies rated “buy.” With a “buy limit order” you to specify the price you’re willing to pay for a stock. You’re guaranteed to pay your “buy limit” price or better if your order is filled. But there’s no guarantee your specified price will be met.

At any rate, don’t pay more for any stock than our “buy under” targets. But be ready to act when the market provides an opportunity.

Portfolio Update

We’ve moved the meat of the matter to the top of the order, to mix a couple metaphors. What they mean is that Portfolio Update now follows In Brief in the far-left column on the homepage of the Australian Edge website. It’s also to emphasize the importance we place, first, on the Great Eight, the charter members of the AE Portfolio, as well as on the 10 companies we’ve added since AE’s Sept. 26, 2011, inception.

When the rally breaks, this is where you want to start building positions.

The long-term strength of the Australian dollar versus the US dollar is one of the long-term themes of Australian Edge. Take a look at two particular graphs in this month’s Portfolio Update, “Australia: Lucky and Good” and “Return Spike.” The former is a roughly 10-year look at the aussie, the latter since Sept. 26, 2011, the day AE made its debut. From a distance their shapes are remarkably similar.

From there to here on the long-term chart involved a great many ups and downs, however, some of them violent. And the current heights our Portfolio favorites enjoy owe much of it to a global “risk on” binge that’s already show its first signs of February fatigue.

Taken together the message is that patience now will be rewarded later.

In Focus

As you’ll note below, this month’s Sector Spotlight shines on two companies for which we have boosted buy-under targets. We’ve also upped them for a company that’s the subject of the February In Focus.

Australand Property Group (ASX: ALZ, OTC: AUAOF), a hold last month, is now a buy under USD2.60. Its recent 5 percent dividend boost followed by a solid if unspectacular full-year 2011 earnings report, which continued to show solid occupancy in the Investment Property division as well as long-term lease visibility, underpins the boost.

We’ve added A-REITs Dexus Property Trust (ASX: DXS, OTC: DXSPF), Goodman Group (ASX: GMG, OTC: GMGSF) and Mirvac Group (ASX: MGR, OTC: MRVGF) to How They Rate coverage under Financials.

The topic of discussion this month is property values down under and where to find value.

Sector Spotlight

As I note at the end of this month’s Sector Spotlight on new Aggressive Holdings addition WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY), “We’re not traders…and should a price rise and stay above a target we’ll either adjust according to the dividend growth that justifies it or else avoid it because the market is simply in love with a story.”

Worley’s recent record of dividend growth and ability to add to its pipeline of projects under long-term contract does support an increase in its target ahead of its Feb. 29, 2012, earnings release. A modest boost along the lines of the 1.4 percent for the fiscal 2011 interim dividend is likely, accompanied by guidance for a final dividend increase consistent with the comparable period’s 25 percent increase.

Transurban Group (ASX: TCL, OTC: TRAUF), which operates toll roads in Australia and America, boosted its distribution 11.5 percent when it announced fiscal 2012 first-half earnings in early February. That merits a boost in its buy-under target to USD6.

Sector Spotlight Transurban is a new addition to the Conservative Holdings.

News & Notes

Stapled and Secured: The Australian real estate investment trusts (A-REITs) under How They Rate coverage are structured as “stapled securities” according to Australian law. There are implications within the confines of the Land Down Under, but these distinctions are basically invisible for US tax purposes.

Dividend Watch List: The business of Australian Edge is to identify businesses capable of paying sustainable and growing dividends over time. The corollary of this mandate is to identify those businesses that are not capable sustaining or growing dividends.

The ADR List: Many Australia-based companies that list on the home Australian Securities Exchange (ASX) are also listed on the New York Stock Exchange (NYSE) or over-the-counter markets as “sponsored” or “unsponsored” American Depositary Receipts (ADR). Here’s a list of those companies, along with an explanation of what these ADRs represent.

Note that Coal & Allied Industries, Macarthur Coal Ltd, Minara Resources Ltd and Foster’s Group Ltd have been removed from How They Rate coverage following completion of merger transactions.

How They Rate

How They Rate includes 100-plus Australia companies, organized according to the following sector/industries:

• Basic Materials
• Consumer Goods
• Consumer Services
• Financials
• Health Care
• Industrials
• Oil & Gas
• Technology
• Telecommuications
• Utilities

We provide updated commentary with every issue, financial data upon release by the company, and dividend dates of interest on a regular basis. The AE Safety Rating is based on financial criteria that impact the ability to sustain and grow dividends, including the amount of cash payable to shareholders relative to funds set aside to grow the business.

We also consider the impact of companies’ debt burdens on their ability to fund dividends. And certain sectors and/or industries are more suited to paying dividends over the long term than others; we acknowledge this in the AE Safety Rating System as well. We update buy-under targets as warranted by operational developments and dividend growth.

This month, in addition to commentary on important developments, we report the next date each company will report financial and operating results.

In Closing

Returning to the “Comments” feature, because we’re notified almost instantly via e-mail when you post a comment after you read an article, we can provide nearly real-time answers to your questions, provided the subject matter can be disposed of in such manner.

Thank you for subscribing to Australian Edge. We look forward to hearing feedback about how we can improve the service.