Carsales – Sell
Carsales.Com is now under Algo Engine sell conditions which reflects the short-term overbought conditions.
Technology One – Buy Signal
Technology One now comes onto our radar following yesterday’s Algo Engine buy signal.
Technology One is one of Australia’s largest enterprise software services companies.
Key results were as follows for 1H 20 earnings
Profit after tax of $19.1m, up 6%
Profit before tax of $25.9m, up 6%
Revenue of $138.4m1, up 7%
Expenses of $112.5m, up 7%
SaaS Annual Recurring Revenue (ARR)2 of $110.2m, up 33%
Cash Flow Generation of $9.9m, up 100+%
Cash and Cash Equivalents of $84m, up 23%
Dividend of 3.47cps, up 10%
We’ll review the full-year earnings in the coming weeks when they release their June numbers.
Telstra – FY21 Guidance
The outlook into FY21 was somewhat disappointing, with the company
guiding to underlying EBITDA of A$6.5-7.0bn, down from 7bn in FY20.
FY23 forecast for EBITDA targeted by Telstra management is A$7.5-8.5bn, this will be required in order to support the $0.16 per share dividend payout.
We continue to see TLS within a band of $3.10 support and $3.50 resistance.
Ramsay Health Care – Rallies 10%
Ramsay Health Care is faced with flat earnings in 2020 and only moderate growth FY21. For patient long-term investors, there’s an income opportunity with defensive low levels of growth.
We see buying support increasing near the $60 level.
The above post is from early August when RHC was trading in the $60 – $62 price range. The stock is now approaching $70 and short-term traders can consider taking profit between $68 – $70.
CBA – Valuation Review
Commonwealth Bank of remains under Algo Engine sell conditions and the only Australian Bank in our model is Westpac.
CBA trades almost 20x forward earnings which is a 30%+ premium to the other major banks.
Our deep value recovery play is the BNKS ETF which captures a broader global exposure.
A2 Milk Company
The A2 Milk Company is now under Algo Engine buy conditions. We are watching for buying support to build near the $18.75 level.
Watch the short-term momentum indicators for a turn higher.
Telstra
Telstra Corporation is under Algo Engine sell conditions after forming a lower high formation at $3.60 back in July.
Telstra reported revenue for the year down 6% to $24bn, profit down 14% to $1.84bn.
Telstra estimated the coronavirus economic-related impact caused a $200 million hit to earnings.
Telstra is likely to trade within the $3.20 support to $3.50 resistance range until late 2021 when we look for the further action on Infrastructure Co spin-off to result in a break to the upside.
Transurban
Transurban is under Algo Engine sell conditions and we’ve remained cautious on valuation grounds and the likely reduced dividend payout.
TCL’s earnings were below consensus and risks exist on breached covenants in the US, along with ongoing COVID-19 volume impacts.
Target $12.50
Gold – Buy the Dip
Vaneck Vectors Gold Miners seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Gold Miners Index. The Index is intended to track the overall performance of companies involved in the gold mining industry.
Buy GDX within the $50 – $55 price range.
Computershare
Computershare FY20 earnings are in-line with guidance, down 20% on the same time last year.
What’s now concerning is FY21 guidance has been downgraded and management is now forecasting a further 10% decline next year.
We remain negative on the CPU outlook and retain our “short” exposure.
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