Origin Energy – The “Higher Low” Pattern Continues

Posted on | by Leon Hinde

The uptrend in the Origin share price is well established and the stock now trades near full value.

We continue our buy-side interest, although we recognize a period of consolidation over the next 6 months is likely.

At the upcoming earnings result, we’ll be looking for commentary from the company on reinstating dividends and progress on the debt reduction program.

Origin is a recommended buy-write strategy within the ASX Top 50 model portfolio.

Consensus earnings forecasts are looking for 23% EPS growth supported by higher energy prices and ramp up of LNG revenue.

 

Woolworths Investor Update

Posted on | by Leon Hinde

Whilst the grocery industry’s profitability is improving, (as the industry becomes more rational), we’re cautious on Woolworths’ share price due to valuation concerns.

Industry analysis shows Woolworths sales momentum is slowing. With the stock now trading 23 x consensus FY19 earnings, on a forward yield of 3.3%, there seems little margin for disappointment.

We continue to track Woolworths for a new “higher low” formation, at which point the stock will be added into the ASX 50 model at a discount to the current trading range.

 

 

Algo Update – Buy OZ Minerals

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in OZ Minerals, with the stock making a higher low at $8.80.

OZ Minerals key asset is a copper mine at Prominent Hill in South Australia. Further expansion in nearby mine at Carrapateena will start in late 2019.

FY18 EBITDA will likely be around $550m and the stock trades on a forward yield of 2%.

We consider OZL a high risk opportunity and encourage investors to apply a stop loss on a break below $8.70.

Buy CIMIC Group

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in CIMIC and we’re encouraged by the buying support which developed around the $40.50 level.

We continue to have a favorable outlook on the fundamental earnings backdrop for CIMIC and we expect next Thursday’s earnings announcement to further support the share price.

CIMIC goes ex-div $0.60 on the 12th September.

S32 – Buy & add a covered call option

Posted on | by Leon Hinde

Our Algo Engine triggered a buy signal in S32 recently at $3.60. With the stock creating a new “higher low” formation, it has now been added into the  ASX Top 50 model.

S32 goes ex-dividend for 8 cents on the 14th September.   Adding a November $3.80 call option will generate an additional 20 cents of income per share.

South 32

CSR is approaching support

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in CSR and we recommend investors keep this name on their watch list.

$4.31 is likely to be a point of support as the stock price trades into a value range supported by a 5% dividend yield.

Last week, CSR management reaffirmed the FY19 earnings outlook for flat growth on FY18 numbers.

For this reason, we view the approaching opportunity as a “technical bounce” rather than the beginning of a prolonged uptrend.

CSR

APA & SKI attract buying interest

Posted on | by Leon Hinde

Following the recent takeover offer for APA at $11 per share, (subject to FIRB review), we  see a reasonable risk/reward opportunity to buy both APA and SKI.

A soft backdrop for global bond yields should provide downside protection as investors seek out defensive yield opportunities. Added upside exists in APA if the takeover is given the green light by regulators.

APA Group

Spark Infrastructure (SKI)

 

 

 

 

Buy Downer EDI – Algo Signal Update

Posted on | by Leon Hinde

Our Algo engine generated a recent buy signal in Downer EDI and we’re encouraged by the fundamentals supporting solid future earnings growth.

The outlook for DOW’s base business is positive, with a favorable
backdrop across virtually all of Downer EDI’s markets including infrastructure, renewables,  resources, health & government projects.

FY18 guidance to be achieved with 10%+ eps growth expected in FY19.

Based on FY19 forecasts we anticipate $11.5b in revenue, EBIT $500m and  DPS $0.29, placing DOW on a forward yield of 4.1%.

ASX:DOW