CSR Ltd (ASX: CSR, OTC: CSRLF), a supplier of residential and commercial building products with a significant investment interest in aluminum production, has posted a 48.3 percent rally since hitting its all-time low of AUD1.17 on the Australian Securities Exchange on Jul. 18, 2012.

We made our CSR our “stock of the month” in the July Big Yield Hunting, the ultra-aggressive advisory I also co-edit with Roger Conrad, because we felt at the time that it had hit bottom, a “Big Bottom,” which was how we headlined that issue.

CSR has had a solid run, much of it based on a rebound in aluminum prices, and we’ve advised subscribers to Big Yield Hunting to close out their positions. We first recommended it at USD1.25, and it closed on Friday, Nov. 16, at AUD1.82.

The half-dozen stocks profiled below are all trading well off their 2012 highs. None are plumbing the relative depths CSR was seeing at the time we picked it for Big Yield Hunting. But it’s fair to say operating prospects for these six companies are better than those for CSR, what with its exposure to a struggling Australian construction market and a still-cloudy outlook for aluminum.

CSR has met rather low expectations, even as it cut its interim dividend in half on Nov. 13. And the market is rewarding it for clearing a low bar.

The stocks below have been punished in recent weeks. But the companies and businesses underlying them are solid.

The place to turn for long-term income is the AE Portfolio Conservative Holdings, where you’ll find stalwarts such as APA Group (ASX: APA, OTC: APAJF), AGL Energy Ltd (ASX: AGK, OTC: AGLNF, ADR: AGLNY), Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY) and Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY).

The first two are trading below our buy-under target, while the latter two are priced above our recommended entry point, as they have been for some time now. We’re waiting for dividend growth in Telstra’s case, while a simple pullback in ANZ’s will do.

We also feature two new Portfolio additions in this month’s Sector Spotlights, new Conservative Holding Wesfarmers Ltd (ASX: WES, OTC: WFAFF, ADR: WFAFY) and new Aggressive Holding Amalgamated Holdings Ltd (ASX: AHD).

Diversified conglomerate Wesfarmers is the eighth-largest publicly traded company in Australia by market capitalization and is the country’s biggest private employer. Its varied revenue streams provide solid support for dividend sustainability and growth.

Amalgamated operates movie theaters in Australia and Germany and also has interests in hotels and an Alpine resort. The company hasn’t cut its dividend during the last decade. It’s an Aggressive Holding because it doesn’t trade on a US exchange.

We’re not looking for anything like the near 50 percent, four-month bounce out of the stocks below that CSR produced. They are similarly though not as speculative as that recommendation.

These are picks for investors who’d like to look for bargains amid the recent panic-driven carnage in global markets.

Gold

The most recent–and what now appears to be the last–edition of the Gold Mine Cost Report, a joint venture between ABN AMRO Bank NV and VM Group/Haliburton Mineral Services, found that the gold mining industry’s average cash cost of production during the first quarter of 2011 was USD620 per ounce.

This survey was based on data from 111 gold mining companies around the world.

On a year-on-year basis, the average cash cost advanced by 13 percent, continuing the double-digit year-on-year growth seen in every quarter since the third of 2009, when costs fell by 0.4 percent. Median costs of production rose by almost 4 percent, to USD583 per ounce in the first quarter of 2011.

Lower quartile production costs for the bottom 25 percent of projects surveyed fell for the first time since the first quarter of 2009, to USD435 per ounce, down 5.4 percent from the previous quarter. Upper quartile costs, meanwhile, rose to USD764 per ounce.

A big part of the rise in average production costs over the last several years is the weakening US dollar, the currency for gold pricing. Another is increasing input costs. Energy and raw material costs have all increased.

According to the June 2011 Gold Mine Cost Report’s region by region review, “the pick of the bunch” in the section covering Asia and the Commonwealth of Independent States/Europe was Medusa Mining Ltd’s (ASX: MML, OTC: MDSMF) Co-O mine in the Philippines, at just USD191 per ounce.

As of the close of trading Down Under on Friday, Nov. 16, Medusa is 12.5 percent off its 2012 closing peak on the Australian Securities Exchange of AUD6.65 established on Oct. 11

Medusa has no debt, AUD52 million in cash on its books and a low payout ratio. The company paid its first cash dividend in November 2010, a payment of AUD0.05 per share for fiscal 2010. It followed with interim and final dividends of AUD0.05 per share for fiscal 2011.

The interim dividend for fiscal 2012 was AUD0.05, but management reduced the final payment to AUD0.02 in order to preserve cash as it pursues an aggressive development program that will see gold production spike to 400,000 ounces per year by 2015 from forecast production of 100,000 to 120,000 ounces for fiscal 2013. Co-o in the Philippines is the key to meeting this target.

Analysts who cover the stock are bullish: Nine rate the stock a “buy” according to Bloomberg’s standardization of broker recommendation-speak, one rates it a “hold” and one rates it a “sell.” The average 12-month target price among the nine analysts who provide one is AUD7.70, which implies upside from Friday’s AUD5.82 closing price of 32.3 percent.

Medusa Mining, currently yielding a modest 1.2 percent, is a buy under USD6.50.

A steep selloff this week has left fellow mid-cap gold producer Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF) at AUD4.76 on the ASX, well below its 2012 high of AUD8.04 established Feb. 9.

This decline is not reflected in the US over-the-counter (OTC) shares listed under the symbol KSKGF, the last trade for which was on Oct. 3 at USD6.05. At the prevailing Australian dollar-US dollar exchange rate the Friday, Nov. 16 close of AUD4.76 equates to USD4.90.

In any case, don’t pay more than USD5.50 for Kingsgate Consolidated, a riskier, higher-yield bet on gold.

Looking at Kingsgate from a Benjamin Graham perspective, it appears a compelling value. Its price-to-earnings ratio is 8.83, while its price-to-book value is just 0.93. That equates to a Graham Factor of just 8.21.

Analyst opinion on the stock is about as split as it can be. Five analysts rate the stock a “buy,” while three rate it a “hold” and five rate it a “buy.” The average 12-month target price among the 10 analysts who provide one, however, is AUD6.47, with a high of AUD10.50 and a low of AUD5.00.

Even the low-ball estimate builds in upside of 5 percent, while the average implies a price rise of 35.9 percent.

Kingsgate is currently yielding 4.2 percent, but the dividend payment history over the past 10 years is decidedly rocky. Management made its initial payment a “final” dividend in October 2002 of AUD0.15 per share. It followed up with interim and final dividends of AUD0.125 in 2003 but reduced to AUD0.10 and AUD0.12, respectively, in 2004.

Drastic reductions followed this incremental step, to AUD0.02 and AUD0.05 in 2005 and AUD0.05 and AUD0.05 in 2006. Ultimately management “omitted” dividends in 2007 and then “discontinued” payouts in 2008.

Management resumed dividends with a final payment for fiscal 2009 of AUD0.15 per share. It followed up with an interim dividend for fiscal 2010 of AUD0.15 and a final dividend of AUD0.20. For 2011, however, Kingsgate paid AUD0.10 and AUD0.05 for interim and final dividends.

Fiscal 2012 saw another upswing, as the company paid AUD0.10 in March and AUD0.10 again in October. That shows up as a 33 percent year-over-year dividend increase. But in this case the statistic is definitely misleading. Kingsgate is no place to be for investors expecting consistent income.

It does, however, present a compelling value opportunity at these levels. And the yield of 4.2 percent–if management can sustain it–is attractive relative to those of other dividend-paying gold stocks.

Aggressive Portfolio Holding Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY) is our preferred vehicle for establishing dividend-paying exposure to the Midas Metal. Newcrest is about to emerge for a cycle of heavy capital investment in what should be a fruitful development program and will soon have a lot of free cash available for dividend increases.

For those whose risk profile and long-term investment goals avail them of such opportunities, however, Kingsgate could have significant upside from here.

Kingsgate Consolidated is a buy under USD5.50 for aggressive speculators.

Iron Ore

We’re adding mid-cap iron ore producer Atlas Iron Ltd (ASX: AGO, OTC: ALTGF) to How They Rate coverage this month. Atlas closed as high as AUD3.35 on Feb. 13, 2012, but has plunged to AUD1.45 on the ASX as of Nov. 16’s close.

It has about AUD21 million in debt but about AUD400 million in cash on its books. Atlas pays its dividend on an annual basis and only starting sharing cash with investors in 2011.

It paid a final dividend of AUD0.03 per share in respect of fiscal 2011 results in October 2011. It will pay another final dividend of AUD0.03 per share for fiscal 2012 on Dec. 6 to shareholders of record as of Nov. 22. Shares are trading ex-dividend as of Friday, Nov. 16.

Like Kingsgate Consolidated in the gold space Atlas is trading at very compelling Graham Factor metrics, with a price-to-earnings ratio of 16.11 and a price-to-book of just 0.70. Based on the current rate the stock is yielding 2.1 percent.

Atlas mines and exports direct shipping ore (DSO) from its operations in the Northern Pilbara region of Western Australia. Ores carrying very high quantities of hematite or magnetite–greater than 60 percent iron–are known as “natural ore” or “direct shipping ore,” meaning they can be fed directly into iron-making blast furnaces.

The company remains on track to achieve exports of 10 million metric ton per annum by June 2013 posting company-record shipments of 700,000 metric tons in October. Atlas has also made progress toward its longer term goal of achieving 46 million metric tons per annum by securing environmental approvals for its Southeast Pilbara mines and associated rail spur development options.

Atlas recently awarded contracts for mining and crushing at its new Abydos DSO project in the Pilbara and announced that mining has begun at its Mt Dove project.

These milestones suggest Atlas is well on track to meet both its near-term production targets and its forecast for longer-term growth.

Thirteen analysts rate the stock a “buy,” while seven rate it a “hold” and two rate it a “sell.” Among the 19 analysts who provide a forecast, the average 12-month target price is AUD2.06, implying upside from 42.1 percent from Atlas’ close on the ASX on Friday, Nov. 16.

Atlas Iron, with a proven ability to develop highly competitive mining operations with low capital and operating costs, is a buy under USD1.75.

Nickel

We raised Mincor Resources Ltd (ASX: MCR, OTC: MCRZF) from a hold to a buy under USD0.70 in the May issue of AE after the company reported a 29 percent sequential decline in cash costs per pound of nickel produced from the second to the third quarter of fiscal 2012.

This was the first manifestation of a restructuring of Mincor’s mining activities. This effort led to mining higher metal grades and, in combination with planned cost reductions, eventually a 27 percent reduction in operating cash costs per pound of payable nickel for all of fiscal 2012 compared to fiscal 2011.

The stock hovered around that level throughout much of the summer then plunged to AUD0.56 on the ASX on Sept. 9 after management reported solid fiscal 2012 results and issued upbeat guidance for fiscal 2013. It’s hard to pinpoint these things, but the selloff may have had to do with a slowing of the trajectory of Mincor’s cost savings.

At any rate, the company posted a 99 percent increase in earnings before interest, taxation, depreciation and amortization (EBITDA) while reversing a year-ago net loss into a net profit after tax (NPAT) of AUD240,000. Realized nickel prices were 19 percent lower, but again Mincor cut cash costs by 27 percent.

Production for fiscal 2013 is forecast at 9,000 metric tons at AUD5.50 per pound compared to 9,179 metric tons at AUD5.78 per pound in fiscal 2012.

Mincor did take off in the early fall, closing as high as AUD1.23 on the ASX on Nov. 2. This week it sold off hard again, as renewed fears about Europe, the commencement of “fiscal cliff” negotiations in the US and continuing questions about the implications for a monumental leadership transition for China’s economy pushed investors around the world hard into the “risk off” camp.

Mincor has no debt and a cash balance of AUD75 million on the books. But it did cut its dividend twice in the aftermath of the Great Financial Crisis/Great Recession. It’s now paid AUD0.02 per share for four consecutive interim and final distributions over fiscal 2011 and fiscal 2012.

It’s back below AUD1, or about USD0.97, after a steep selloff this week. We like it for aggressive investors who’d like to play a rebounding nickel prices as a proxy for recovering global economies based on its 4.3 percent yield and positive cost trajectory. Mincor Resources is a buy under USD1.00.

Western Areas NL (ASX: WSA) owns and operates high-grade nickel production assets in Australia and base metals development projects across Australia, Canada and Finland.

Production efforts are concentrated in two of the highest-grade underground nickel mines in the world, Flying Fox and Spotted Quoll, both within Western Area’s Forrestania project area in Western Australia. Western Areas has a track record of meeting production target, and it’s Australia’s lowest-cost nickel miner.

Flying Fox and Spotted Quoll both posted record nickel-in-ore production volumes in the first quarter of fiscal 2013 as well as higher grades and recoveries. Cash costs also declined.

Flying Fox mined metric tons increased 6 percent sequentially to 102,200, offsetting a 6 percent drop in grade to 5 percent. At Spotted Quoll mined metric tons were up 2 percent to 43,600 metric tons, with grades increasing to 5.4 percent.

With the higher production cash costs fell 14 percent quarter over quarter to AUD2.49 per pound.

Cash at the end of the quarter was AUD50 million, down from AUD165 million at the end of fiscal 2012. But Western Areas paid down a AUD105 million convertible bond during the quarter. Net cash flow allowing for this positive was AUD1 million.

The stock sold off hard this week along with Mincor and the rest of the market. But at Friday’s close of AUD3.96 on the ASX Western Areas is 32.2 percent below the 2012 closing high of AUD5.84 it reached on Feb. 6.

Nine analysts rate the stock a “buy,” while seven rate it a “hold” and two rate it a “sell.” The average 12-month target price is AUD4.88, implying near-term upside of 23.2 percent not including dividends.

Western Areas, currently yielding 2.8 percent, is a solid pure nickel play under USD4.60 on the ASX due to its high grades, low costs, consistent production and exploration upside.

Diversified Media and Industrial Equipment

Seven Group Holdings Ltd (ASX: SVW) hit a one-year closing low of AUD6.30 on Nov. 15 before bouncing to AUD6.37 on Friday, Nov. 16. The stock closed as high as AUD10.55 on Apr. 17.

Eight analysts rate the stock a “buy,” while two rate it a “hold” and one rates it a “sell.” The average 12-month price target is AUD9.43, implying upside from Friday’s close of 48 percent.

Seven Group is Seven West Media Ltd’s (ASX: SWM, OTC: WANHF) largest shareholder at 33.2 percent ownership. Seven West Media owns two of Australia’s iconic media assets, including the largest commercial television network (by audience and advertising market share), Seven Network, and The West Australian, the leading metropolitan newspaper in Western Australia.

It also owns the second-largest publisher of magazines in Australia, Pacific Magazines, and 21 West Australian regional newspapers, nine regional radio licenses, a specialist publishing business and West Australian’s digital division.

Seven Group’s WesTrac unit is the Caterpillar dealer for Western Australia, New South Wales, the Australian Capital Territory and northern China. Caterpillar is the leading global construction and mining equipment provider. WesTrac is one of Caterpillar’s top five dealers in terms of sales volume among 182 dealers around the world.

Seven Group posted fiscal 2012 operating results that was in line with guidance, as revenue rose 41 percent to AUD4.46 billion and underlying earnings before interest and taxation (EBIT) was up 57 percent to AUD533.1 million. Statutory net profit after tax (NPAT) climbed 121 percent to AUD176.7 million.

During Seven Group’s Nov. 15 annual general meeting CEO Peter Gammell said the media and industrial services company was “doing very well” and forecast an increase in fiscal 2013 first-half underlying profit to AUD200 million to AUD220 million from AUD169.3 million in the first half of fiscal 2012.

Despite the increased earnings forecast, Mr. Gammell warned that the outlook for the company’s construction and mining equipment operations in China was uncertain due to declining trading conditions. The Australian mining equipment business would also suffer in the second half of fiscal 2013 due to cancelled or deferred mining projects.

Mr. Gammell also noted that Seven Group’s 33 percent stake in Seven West Media had an uncertain outlook due to the subdued advertising market.

Seven Group voted in favor of News Corp Ltd’s (ASX: NWS, NSDQ: NWSA) takeover offer for Consolidated Media Holdings Ltd (ASX: CMJ, OTC: CMJFF), of which Seven Group owned 25.3 percent. Australian Competition and Consumer Commission and Consolidated shareholder approval of the AUD3.45 per share offer mean Seven Group will realize about AUD473 million on its stake.

The sale of Consolidated will help Seven Group pay down debt and streamline the company’s assets. It will also help satisfy the high levels of working capital and other investments in its industrial services units that have stretched the company’s balance sheet, not to mention further growth efforts.

Management boosted the final dividend by 11.1 percent and paid investors a total of AUD0.38 for fiscal 2012, up from AUD0.36 for fiscal 2011. Since paying its first dividend in April 1994 Seven Group has never cut. As of Friday’s close the stock is yielding 6 percent.

Seven Group Holdings, a cash infusion from the Consolidated Media sale bolstering its balance sheet and the safety of its dividend, is a buy under USD7 on the Australian Securities Exchange.