Leon Hinde

ASX and Macquarie Group are both under Algo Engine buy conditions and are current holdings in our ASX 100 model portfolio.

ASX is likely to deliver 5% EPS growth and trades on a 3.5% yield.  When combined with a covered call the cash flow yield increases to 9% per annum.

Macquarie is likely to deliver 10% EPS growth and trades on a 5% yield. We see scope for 10 – 15% capital growth over the next 12 months.

TWE is under Algo Engine buy conditions and is a current holding in the ASX 100 model portfolio.

With the share price finding buying support at the recent $14 low, we consider TWE a compelling buy-write opportunity. The February earnings result should deliver mid-teen earnings growth and therefore, support the current 22x multiple.

For more detail on the covered call strategy, please call our office on 1300 614 002.

Amcor is expected to finalise the acquisition of Bemis in the coming weeks.

The continuation of raw material costs coming down, should provide a more supportive backdrop and into FY20 and FY21 we forecast Amcor to deliver high single digit earnings growth.

We have Amcor now trading on a 4.8% forward yield, based on FY19 EBIT of $1.2bn and dividends per share of $0.45.

Although AMC is under current Algo Engine sell conditions, we highlight the strong share price support,  in a relatively weak market at present. 23

Bank stocks are down globally on average 30 to 50% from their recent highs. Even large cap US banks have seen heavy selling caused by global growth concerns and the impact of the inverted yield curve pressuring margins.

JP Morgan, (listed on the NYSE), is arguably the best operated bank in the world with one of the strongest balance sheets. Nevertheless, it has endured a share price fall from $120 in September to $91 in late December.

JP Morgan – finding support at $91 and is now under Algo Engine buy conditions.

BANKS, is a Betashares ETF providing broad based exposure to the global banking sector. The trend is obvious with a 30% sell off in 2018.

The MVB Market Vectors Australian Bank ETF shows that we’re still under Algo Engine sell conditions following the lower high formation in July.

The following bank names may see a bounce from oversold conditions, CBA, NAB and WBC.

Our Algo Engine highlighted the higher low formation in IPL and with the stock now trading into our targeted range at $3.30, we suggest accumulating a position.

Buyback to resume in January.

Should we see a rebound in global confidence, oil prices are likely to snap back from the recent  45% sell-off.

WPL, OSH and STO are our preferred exposures along with the OOO Betashares Oil ETF.

OOO is a Betashares Oil ETF and a current holding within our ASX ETF Model Portfolio.

We feel the 40%+ correction in oil prices is starting to look overdone and an opportunity on the buy-side is beginning  to emerge. We’ll track this through the short-term indicators and keep you informed of any pending inflection point.

Buying Medibank at $2.31 was a high conviction idea expressed on the blog, we now see the stock consolidating near $2.50.

We recommend selling covered call options to enhance the income return.

MPL goes ex-div $0.055 on the 6th of March.

For more detail on the strategy, please call our office on 1300 614 002

Sonic Healthcare is under Algo Engine buy conditions and is a current holding within the ASX 100 model portfolio.

SHL has strengthened its US footprint with the purchase of Aurora Diagnostics for US$540m, (A$750m), mainly funded with up to a A$700m equity raise.

The placement is priced at A$19.50/share, an 8.8% discount to the last
close price.

FY19 revenue $6.2bn, EBITDA $1.1bn, net profit $5.30mn, EPS $1.22, DPS$0.90 places Sonic on a forward yield of 4.5%

We recommend buying Sonic Healthcare and selling a covered call option to enhance the income.