Shares of ANN reached a 52-week low at $22.06 in early trade today.
This represents a 25.5% drop since the share price traded an intraday high at $29.65 on July 27th.
ANN is currently under ALGO Engine buy conditions from $24.80.
As illustrated in the chart below, the price has reached the value target near $22.00.
BHP is under Algo Engine buy conditions from $31.20.
Shares of the mining giant have dropped over 12% during the last three weeks and have reached a value area.
Over the next few weeks, we expect the company to make an announcement about the completion of their shale divestment and its plans for the cash.
It’s widely believed that BHP will announce a special dividend and a share buyback program.
Betashares ETF, HACK provides diversified exposure to the global leading cyber security companies.
We covered this name in the recent “Opportunities in Review” webinar and suggested adding it to your watch list.
With the market sell-off, we’ve now seen HACK move into our forecast “value” range.
Investors with a medium term outlook can consider accumulating within the $6.00 – $6.50 range.
HACK
GPT has been a high conviction “yield sensitive” stock recommended in the Monday morning “Opportunities in Review” webinar.
As the stock nears our $5.25 target, we recommend investors look to sell the $5.25 covered calls and strip-out the income through the call option and upcoming dividend.
GPT
Brambles reported 1Q FY19, which guided towards flat 1H EBIT growth.
With the stock trading 16 x earnings and 3% yield, we believe there is only limited upside to the share price in the short-term.
The attractive story here is the upcoming spin-off of the plastic pallet pooling business. We expect this to go to a shareholder vote and be finalized early next year.
Buy BXB and sell covered call options to enhance the yield.
Brambles
At Flight Centre’s AGM yesterday, management provided a weaker than expected trading update.
The update suggested trading conditions were softer than expected driven by weak Australian leisure business.
FY19 underlying profit before tax was guided to be within $390-420m which equates to around 5%.
Whilst the update was below consensus, we believe the stock is close to support and will find buying interest near the current $48 – $49 level.
Flight Centre
CIMIC will report their 3Q18 earnings result tomorrow.
We expect 12% growth based on the same time last year and the company to reaffirm the calendar year 2018 guidance of underlying NPAT to be in the range of $750 million+.
The company is currently bidding on several major projects within the contract mining and infrastructure construction divisions. Work in hand is currently over $35 billion
We also look for any additional information around the 10% share buy-back program. FY19 dividend of $1.70 per share, places the stock on a forward yield of 3.6%
We recommend accumulating CIM & Downer EDI.
Cimic
The market is looking for Domino’s to grow earnings in FY19 at 10%.
This translates into $1.80 EPS, which will place the stock on a forward yield of 2.4%.
We believe the February result will miss consensus expectations and will act as a catalyst for downside selling pressure to build.
Dominos
Resmed should continue to deliver 10% EPS growth per year over the next 2 – 3 years.
However, at 27x F19 earnings and 1.5% yield, the stock looks expensive.
Other names within the Healthcare space such as CSL at 32x and COH at 38x FY19 also, look expensive.
With the above in mind, our base case is that the sector trades sideways and investors should add a covered call option to enhance the returns.
Resmed
CIMIC is growing earnings at 12 – 14% p/a and continues to win new large scale infrastructure projects, helping to support the work in hand pipeline.
The stock has recently retraced from $51 back to $46, although we’re mindful of the price gap in the chart down to $43.50, we see value beginning to emerge.
Our accumulation range is $43 – $46.
Keep Downer EDI on your watch list. $7.00 looks like a low risk entry level.
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