Buy Tabcorp At Current Levels
We retain our strong buy conviction on Tabcorp.
Cost savings following the Tatts merger and forecast improvement in August earnings are two key catalysts which support the recent Algo Engine buy signal at $4.22.
Tabcorp
Value Emerging In Local Asset Managers
Investors will be interested to look at the sell-off in the domestic fund managers, such as AMP, BTT, PTM, MFG & PPT.
Within this group, BTT and PTM are the two names which are on our watch-list.
PTM
BTT
Star Entertainment – Algo Update
Our Algo Engine triggered a buy signal in SGR at $5.11 during yesterday’s ASX trading session.
The stock looks oversold and now sits within our forecast “value range”.
The August earnings result will likely provide the catalyst for the stock to re-rate higher.
SGR
IAG – Buy-write Producing 10-12% Cash-Flow
The key take-away from the this week’s AGM is that IAG remains confident of reducing its cost base by >A$250 million from A$2.5 billion to A$2.25 billion by 2020.
The company also reaffirmed the outlook for 10% EPS growth over the next 3 years.
IAG provides a solid buy-write opportunity with the stock retracing back from recent highs and now finding support at $7.50.
FY19 profit is forecast to be $1billiWn, EPS $0.45 and DPS $$.36, placing the stock on a forward yield of 4.8%.
Dow Jones – Down 10% in 2018
The Dow Jones 30 index is down over 10% this year and a pattern of “lower high” formation is building.
In addition, we have noticed a pattern of falling volume on “up days” and increased volume on days when the Dow trades lower.
24,622 now acts as the most recent level of resistance.
Dow Jones 30 Index
Buy Amcor – Price action finds support
We recommend investors buy Amcor and hold the position into the September dividend period.
To add to the return, covered call options should be sold at the $15.00 strike into December.
AMC goes ex div $0.295 on 4th September.
Seven Group vs Seven West Media
We have reviewed the performance of Seven Group holdings versus Seven West Media.
Whilst Seven Group Holdings is a well performing growth business, Seven West Media is the free to air television business, which faces structural headwinds.
It’s worth highlighting the performance of the recent ALGO signals and the contrast with Seven Group last displaying a buy signal within a strong uptrend and Seven West Media displaying a recent sell signal on the “lower high” formation within the ongoing downtrend.
IPL – Growth on offer into FY20
Our Algo Engine recently triggered a buy signal in IPL, and with the stock now retesting the $3.50 low, we consider this a buy opportunity.
Nitrogen based fertiliser prices progressively weakened through the 1Q, which helps explain the recent share price weakness, however, phosphate prices have proven more resilient and IPL will also benefit from the lower US corporate tax rate.
Spot DAP prices at US$410/t are above most analysts financial model forecasts and with IPL’s earnings growth accelerating out into FY20, the stock now trades on FY20 yield of 5%.
FY20 revenue $3.6 billion, EBITDA $990 million and EPS $0.30.
IPL
XJO – S&P/ASX 200 Road Map
The S&P/ASX 200 index finished the week up 0.5%.
The best performer was the Energy sector, up 3.3% and the worst performer was Utilities sector, down 1.9%.
With global equity markets selling-off again in the overnight session, (following ongoing concerns around trade wars), index traders should stay short the market and run a stop-loss on a reversal back through 5806 on the XJO.
US large cap financials will kick-off March quarter earnings later next week and with solid earnings expected, we may see a late week reprieve in selling.
5630 will likely become a mid-week support level for the XJO.
Westfield Corp – Generating 10% income
Westfield has a take-over offer on the table from European giant Unibail-Rodamco for the equivalent of $10.00 per share.
A combination of a weak US dollar and a fall in Unibail’s share price has seen WFD trade below the initial offer. With the stock finding support at $8.50 we feel there’s a low risk opportunity to buy WFD and sell covered calls.
The strategy generates 10% annualised cash flow and allows for a moderate increase in capital growth.
WFD goes ex-div $0.165 on the 11th August .
Westfield
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453