ALGO Sell Signal For Commonwealth Bank

Posted on | by Todd

Our ALGO engine triggered a sell signal on CBA into yesterday’s ASX close at $75.65.

The “lower high” pattern in the stock is referenced to the high posted at $77.50 on March 12th.

Subsequently, CBA has been removed from our ASX Model portfolio after being held for 148 days with a net gain of 1.52%.

Recent reports from both Citi and Morgan Stanley show the brokers have retained their sell ratings on CBA following its decision to demerge its wealth management operations.

Citi now has a downside target of $72.00 and Morgan Stanley is expecting the stock to drop over 15% to $64.00 over the next 12 months.

With this signal on Friday, our ALGO engine is now showing sell signals for all of the domestic banking names with the exception of MQG.

CBA

ALGO Buy Signal For Rio Tinto

Posted on | by Todd

Our ALGO engine triggered a buy signal on RIO Tinto into yesterday’s ASX close at $79.20.

The “higher low”  share price pattern is referenced to the $77.40 low posted on April 17th.

The share price reached a 2-month low of $78.30 yesterday on continued downside pressure on both Iron ore and Copper.

However, a recent broker note from Credit Suisse  included a an “outperform” rating with an upside target just over $89.00.

The report cited the recent sale of the miner’s Grasberg asset  in Indonesia as providing additional cash to follow through on their $1.3 billion share buyback plan announced earlier this year.

Frequent Blog readers would have noticed that our ALGO engine has triggered buy signals on several resource names (as well as ETFs) over the last month. These include OZL and FMG.

In addition, several commodity and metals-based indexes are testing multi-year support levels as the combination of a stronger USD and threats of trade wars continue weigh on the sector.

In general, we believe a recovery in the broad commodity sector will take more time to form a sustainable base. As such, we’ll watch these resource sector names closely and update investors on specific entry level in future postings.

Rio Tinto

 

 

 

 

CYB To Re-Brand To Virgin Money After Acquisition

Posted on | by Todd

Shares of CYB remain firm as the beneficial synergies of the Virgin Money acquisition begin to crystallize into forward guidance estimates.

Reports show that CYB will spend GBP 60 million to re-brand all of its businesses to Virgin Money, but overall, the amalgamation will result in over GBP 120 million in cost savings.

It’s expected that these savings will equate to around 13% EPS growth over the next 18 months and lift the dividend to 25 cents per share.

Our ALGO engine triggered a buy signal in CYB in July of last year at $4.35. We have a medium-term upside target in the $6.25/35 range.

CYB

CSR is approaching support

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in CSR and we recommend investors keep this name on their watch list.

$4.31 is likely to be a point of support as the stock price trades into a value range supported by a 5% dividend yield.

Last week, CSR management reaffirmed the FY19 earnings outlook for flat growth on FY18 numbers.

For this reason, we view the approaching opportunity as a “technical bounce” rather than the beginning of a prolonged uptrend.

CSR

Telstra Shares Firm On Venture Arm News

Posted on | by Todd

Shares of Telstra have started the new financial year off with a firmer tone rising  3% over the last three days.

Some of the positive sentiment has been driven by the news that TLS has sold 20% of its ventures arm to US private equity firm HarbourVest for $75 million.

The move is part of a broader plan for TLS to become a more technology-focused company and is consistent with the “Telstra2022” strategy announced last week.

HarbourVest has more than $50 billion in assets and the venture fund with TLS is expected to be valued at about $675 million.

After the $500 million loss from the Ooyala fiasco last year, the market may need some convincing that further investment in emerging 5G and next generation businesses will truly add to shareholder value.

It’s reasonable to expect that joining forces with the more experienced HarbourVest validates TLS’s commitment to the venture revenue stream and will see better results.

We believe that at current levels,  TLS represents good value for investors with a medium to longer-term investment time horizon, with an initial target of around $3.90.

At $2.71, TLS is trading at a 9.7 PE and is on a 7.6% yield.

Telstra

APA & SKI attract buying interest

Posted on | by Leon Hinde

Following the recent takeover offer for APA at $11 per share, (subject to FIRB review), we  see a reasonable risk/reward opportunity to buy both APA and SKI.

A soft backdrop for global bond yields should provide downside protection as investors seek out defensive yield opportunities. Added upside exists in APA if the takeover is given the green light by regulators.

APA Group

Spark Infrastructure (SKI)