S32 Production Update

Posted on | by Leon Hinde

S32’s 1QFY19 production result was generally better than the market had expected.

However, with forward earnings guidance unchanged, we see further downside for the share price given the weak market backdrop.

Price support is likely to be within the $3.20 to $3.50 range.

South 32

IAG – Finding Investor Support

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal in IAG last Thursday.

With the stock trading down to $7.00, a 1-year low for the share price, we now expect buying support to build.

Internal momentum indicators suggest a rebound into the $8.00 range is likely over the medium-term.

Added price support is likely from capital management post-Asian asset sales.

We estimate up to $600 million made up of $300 million in special dividend and $300 millon in share buybacks.

 

Buy Healthcare Names: CSL, RMD & SHL

Posted on | by Leon Hinde

Our Algo Engine has triggered buy signals in Sonic Healthcare, Resmed and CSL over the past few trading sessions.

RMD has experienced its first sell-off since rallying from $10 last year to $16 only a few weeks ago.

The ALGO engine is now flagging the new “higher low” at $14 and we suggest buying a 1/2 size allocation here and then waiting to see if we get another ALGO signal to add to the position.

CSL provides good long-term fundamentals. The PE is still expensive, however, 10 – 20% EPS growth is attractive! Accumulate at $180

SHL looks to be good value at $23. We see resistance is $25, so look to sell call options to enhance the return. 

Chart: RMD

Chart: CSL

Chart: SHL

 

 

Brambles Offers Value + Spin-Off

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal in BXB last week and we highlight the price gap in the chart down to $10.06.

We’ve  upgraded BXB to accumulate and our buy target range is $10 – $10.40

The potential spin-off of the plastic pallet pooling business will unlock value for shareholders and provides the catalyst for us to have a favorable medium term outlook on the business, along with modest earnings growth showing up in the latest 6-month result.

Brambles

Add Wesfarmers To Your Watchlist

Posted on | by Leon Hinde

Wesfarmers at $46 looks attractive heading into the spin-off of Coles later next month.

Growth in the separated businesses will be limited, so once the spin-off is completed, investors can sell covered call options and strip-out the returns from the dividends and option premium.

Note: WES released its scheme booklet as part of the Coles demerger. The vote is scheduled for November 15th with Coles to commence trading on November 21st.

Wesfarmers

FMG Announces A $500 Million Buyback Plan

Posted on | by Leon Hinde

Overshadowed by the general market weakness, FMG has announced a $500 million on-market share buy back plan earlier this week.

Once completed it will be 4 – 5% earnings accretive by 2020.

Shares in FMG have risen over 6% since the announcement and we see the next significant price resistance level near the July 25th high at $4.60

 

Fortescue Metals Group

CWY – Buy The Dip To $1.70

Posted on | by Leon Hinde

CWY was recently added into our ASX Top 100 model portfolio.

We covered this name in the recent Opportunities in Review webinar on Monday and identified $1.70 as a price target to begin accumulating the stock.

Call our office at 1300 614 002 if you would like a replay of the webinar emailed to you.

Cleanaway Waste management

Quality On Sale – LLC, ASX, CSL & ALL (Video Link)

Posted on | by Leon Hinde

Lendlease, ASX, CSL and Aristocrat are names that we covered in Monday’s Opportunities in Review webinar.

Again, we draw your attention to these high quality businesses that have seen a recent correction in their share price.

We believe these names are close to finding support and should be the focus of establishing entry conditions. Watch the short-term momentum indicators for a reversal higher.

Click below to watch the short two minute video