Stockland was added to our ASX 50 model in January and we’ve continued to accumulate the stock in recent trading sessions.
The latest earnings result continued to show strong momentum in residential property sales which should help support a move back to $4.40
SGP is forecast to pay $0.13 dividend in June which places the stock on a 5.5% annualised yield.
Stockland Corporation
Australian banks have been oversold, and over the past two weeks we’ve seen capital flows reallocated towards the sector.
NAB has now rallied $2.00 or 6% since the beginning of February.
Limited revenue growth has created a “shrink to grow” strategy among all of the major banks, along with a renewed focus on cost control.
Due to the delay in benefits from the strategy being passed through to shareholders, we believe the current share price rebound will be limited.
The NAB chart below perfectly illustrates the range where we expect selling pressure is likely to build.
NAB
AGL shares are oversold and investors should buy the stock and look for a recovery into the $23.50 range.
Selling covered call options into May or June will help to enhance the yield, whilst waiting for the next $0.50 forecast divided payment in August.
AGL
At $4.75, GPT looks oversold and should rally back to the $5.25 range in the near term.
GPT will pay $0.125 dividend on the 29th of June.
GPT
Woolworths 1H18 EBIT was up 10% on the same time last year and 1H18 NPAT came in at $900 million, an increase of 15%.
Earnings Per Share (EPS) for FY18 is likely to be around $1.35 and if we assume moderate growth into FY19 and FY20, with an EPS range $1.40 to $1.60, the stock trades on a forward yield of 4.1%.
On the above calculation, fair value for WOW is near the $26.50 range.
Woolworths
The S&P ASX 200 Index finished the week up 1.6%.
The best performing sector was Health Care, up 4.2% and the the worst performer was the Energy sector, down 0.6%.
Inghams Group reported 1H18 NPAT of $65 million versus $51 million the same time last year, whilst revenue of $1.2 billon was down 1.7%.
The company announced an interim dividend of $0.095
FY19 EPS growth is forecast to increase by 5.5% and DPS will increase slightly to $0.20, placing the stock on a forward yield of 5.6%.
After buying ING at lower levels, we’ve locked-in profit as we don’t consider the stock a core portfolio holding.
Inghams Group
BHP’s 1H FY18 earnings result was below market expectations.
Despite the cost pressures, BHP has stepped up cash returns to shareholders, with the US$0.55 interim dividend a positive surprise in the 1H FY18 result.
FY19 revenue and underlying profit is forecast to remain flat, placing the stock on a forward yield of 4.2%.
We own BHP at lower levels and sold the $29.50 March calls for a $0.60 credit to enhance the cash flow. We continue to remain exposed to the March dividend.
BHP
IVC’s FY17 result overall was slightly above our market expectations, although FY18 outlook guidance was disappointing.
FY17 underlying EBITDA increased 8% to $124 million, the result was driven by 2% revenue growth.
Based on FY19 EPS of $0.68 and DPS $0.48, IVC now trades on a forward yield of 3.4%.
IVC
At $14.00, we believe Amcor is oversold and investors should begin accumulating the stock.
As volatility picks-up in global markets, defensive yield names will begin to outperform in the next 3 to 6 months.
Amcor currently trades on a forward yield of 4.5% and the company pays a $0.26 dividend on the 27th of February.
AMCOR
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453