Dow Jones falls 11.6% – Where is support?

Posted on | by Leon Hinde | Leave a Comment on Dow Jones falls 11.6% – Where is support?

The Dow Jones Index dropped 724 points on Thursday and another 425 points in the overnight session to close at 23,533.

The benchmark index has now declined more than 3,000 points, or 11.6% from its high on Jan 26th, at 26,616.

We’ve been warning about the stretched PE valuations in US markets and we forecast further selling in the tech-heavy NASDAQ, which will drag markets lower.

The Dow closed at 19,827 on Inauguration Day, 20th Jan, 2017, which means it has about 3,700 points further to go before the Trump rally gains disappear.

22,000, or a 50% retracement of the breakout rally which began in late 2016, provides a reasonable downside target where buying interest is likely to provide support for the index.

The NASDAQ is 10% above the 50% retracement price target.

 

 

Algo Update – Goodman Group (Sell = 22% Return)

Posted on | by Leon Hinde | Leave a Comment on Algo Update – Goodman Group (Sell = 22% Return)

The Algo Engine triggered a sell signal in Goodman Group earlier this week. The signal resulted in GMG being removed from ASX 50 model portfolio. The position was held for 550 days with a return of 22.2%, plus an additional $0.39 in dividends.

Goodman Group has been a very strong performer within the REIT sector, with underlying EPS consistently at high single digits. The sell signal can be viewed as a cautious reminder of the compressed 3.4% yield GMG now trades on.

Goodman Group

TPG Reported 1H18 Earnings

Posted on | by Leon Hinde | Leave a Comment on TPG Reported 1H18 Earnings

   TPG reported 1H18 EBITDA up 0.1% to $418 million. The 1H result was ahead of expectations and TPG upgraded their full year earnings guidance on the back of ongoing cost reductions.

We continue to view TPG as expensive and with significant execution risk around upcoming capital expenditure, we prefer the short-side of this trade.

FY18 EPS $0.42 and DPS $0.04, places the stock on a forward yield of less than 1%.

TPM

 

 

Tabcorp – In 2020

Posted on | by Leon Hinde | Leave a Comment on Tabcorp – In 2020

We look at what the financials are likely to be in 2020; post the Tatts Group integration and cost savings.

FY20 revenue $5.5 billion, EBIT $880m, (FY17 was $325m) with underlying earnings growth of 6 – 8% per year and a forward dividend yield into 2020 of 5.5%.

Investors will be well served by tracking TAH for an upcoming entry point as the stock price re-bases near current levels.

TabCorp

Buy GPT & WFD At Current Levels

Posted on | by Leon Hinde | Leave a Comment on Buy GPT & WFD At Current Levels

We recommend buying GPT & WFD and placing a stop-loss orders below the recent support levels, indicated on the relevant charts below.

Investors may prefer to hold the position and sell call options to enhance the income, whilst staying exposed to the next round of dividends.

GPT will pay $0.123 dividend on 29th June.

WFD will pay $0.16 dividend on 11th August.

 

 

Property Stocks Find Buying Interest

Posted on | by Leon Hinde | Leave a Comment on Property Stocks Find Buying Interest

As the US yield curve flattens, which is caused by the long-end of the curve no longer increasing at the same rate as the shorter-end, we’ve started to see institutional money flow back into ASX listed yield sensitive names.

Our preference among these, within the property sector is GPT, SGP, and WFD, (based on valuation grounds).

Within Utilities and Infrastructure, we continue to like AGL, SYD and TCL.