The S&P/ASX 100 is nearing a break of the upward trending 10 day moving average. We’re using this as a reference for the shorter term momentum to align with the broader index sell signal.
Since writing the above post we are now seeing the XJO trade below the 10 day average.
Caltex Australia is under Algo Engine sell conditions and was removed from the model portfolio late last year at $28.50.
Fuel retail margin was A$35-45mn lower at end-February, (based on the same time last year), driven by diesel pricing and gasoline retail competition. The company will provide a Q1 trading update at its AGM on 9 May 2019.
In FY20 we assume $25.5b in revenue and 4% increase in EBIT to $1.07b which flows through to $1.25 in dividends, placing the stock on a 4.5% forward yield.
For investors who are not taking up the buy back offer, we recommend selling a covered call option to enhance the income return.
For more detail, please call our office on 1300 614 002.
InvoCare is under current Algo Engine sell conditions, following a recent lower high formation at $15.00.
Invocare’s balance sheet will be strengthened following the announced raising of up to A$85m, via institutional placement which will include $20m via a share purchase plan. We expect this to be done at around $13.30.
We anticipate the next signal to be a Algo Engine “buy” and we’re likely to see this before the end of April.
We see long-term value in IVC and suggest investors watch for an entry signal between $13.30 & $13.80
Crown Resorts is under Algo Engine buy conditions and is a current holding in the ASX 100 model portfolio.
We see technical price support at $11.50 to $11.80. We suggest buying the stock for the upcoming dividend on the 20th of March and adding a Euro call option to boost the cash flow return.
For more detail on this strategy, please call our office on 1300 614 002.
Aristocrat Leisure is under Algo sell conditions following the lower high formation at $26. This is a favourite amongst local fund managers, with analyst price targets as high as $40.
The recent selloff has seen the PE fall from 30x back to a 17x PE. With the share price at $23, buying interest is now building and we may see a counter trend rally extend through to $24.50.
Woolworths Group is a current holding in our ASX 100 model portfolio, as well as the ASX 20 & 50 models.
The stock is up over 9% including dividends after being added at $28.50 back in August last year. With the share price trading at 24x forward earnings and only a 3% dividend yield, we consider it expensive.
We suggest selling a long dated European call option to enhance the income. For more detail on the strategy, please call our office on 1300 614 002.
Amcor has released the scheme booklet for its all-stock acquisition of Bemis with the transaction unanimously recommended by the Boards of both companies.
The Bemis transaction is expected to be completed on 15 May 2019.
AMC reported a solid 1H19 result in February and forecast underlying EPS growth of 3 – 4% supported by US$180m in cost synergies to be realized from the merger over the next 3 years.
Amcor trades on a 4.5% forward yield. In FY20 we expect the combined revenue to exceed US$14b and EBIT to increase to US$1.7b.
We remain buyers at or near $14.50.
Seek is a current holding in our ASX 100 model portfolio. The stock goes ex-div $0.24 on the 25th of March and adding a covered call option will boost the annualized cash flow to 10%+.
Seek delivered recent earnings slightly ahead of market consensus and we consider the stock an attractive income contributor to client portfolios.
For more detail on the covered call strategy, please call our office on 1300 614 002.
CBA:ASX is under Algo Engine sell conditions, (as are all banks excluding Macquarie & ANZ), and we highlight the technical lower high pattern at $73.50.
CBA has announced they intend to suspend preparations for the demerger of wealth and mortgage broking business, with no time frame provided. We feel this adds another layer of complexity with executing the business strategy to become a simpler, streamlined business.
CBA trades on 15x earnings and 5.8% dividend yield.
Suncorp Group is under Algo Engine sell conditions following a lower high formation at $13.50.
We see reduced scope for Suncorp to reprice mortgages, given the
current political and regulatory climate, and we expect to see ongoing margin
pressure.
Stay on the short side and watch for the share price to trend lower with the 10 day average crossing below the 50 day average as a reference point.
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453