Medibank – Buy-Write Generating 10% Cash flow

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Medibank remains in our ASX50 model portfolio from lower levels and we continue to view the stock as a worthwhile buy-write strategy at the current “higher low” price formation.

MPL pays $0.053 dividend on the the 7th of March and when complimented with a $3.30 June call option, (credit  $0.11), the strategy delivers 10%+ in annualised cash flow.

MPL reports 1H18 earnings on the 16th of February and the market is looking for 3 – 5% EPS growth and NPAT of $230 million.

 

Algo Update – Buy AGL

Posted on | by Leon Hinde | Leave a Comment on Algo Update – Buy AGL

Our Algo Engine triggered a buy signal on the 23rd of August in AGL at $22.64.

Following this, AGL rallied to $26.50 before retracing back to the current higher low at $23.70.

AGL remains in our ASX50 model portfolio and a positive earnings result when the company updates the market on the 8th of February, should provide renewed buying support.

AGL pays a $0.41 dividend on the 23rd of February.

 

 

 

Ansell – 1H18 Earnings

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Based on the positive macro data, cost savings, benefits from US tax changes and the transformation program Ansell announced, we see upside to Ansell’s upcoming earnings result on the 12th February.

ANN currently trades at 17x 2019 earnings and a forward dividend yield of 2.7%.

We’re buyers on near-term weakness ahead of the upcoming earnings result.

Ansell

 

 

Aristocrat Leisure – Buy on the Dip

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ALL’s exposure to recurring revenue is increasing, although the business remains exposed to cyclical trends.

The market’s response to Aristocrat acquiring Big Fish has been mixed.

We see the the deal as 3 – 4% EPS accretive in 2019 and will help to underpin EPS growth of 20%, placing ALL on a 2019 dividend yield of 3.3% and a PE of 20x earnings.

ALL is among the best performing stocks in our ASX 50 model and we advise investors to look for near-term buying support  along with the next Algo buy signal.

Aristocrat

 

Suncorp – Earnings Outlook

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SUN is due to release its 1H18 results on Thursday 15 February.

We are expecting NPAT of $510m, which is around 50% of the full year target of $1.05b

FY18 EPS growth should be around 5% and the dividend will remain flat at $0.73 placing Suncorp on a forward yield of 5.3%.

Our Algo Engine triggered a sell signal on the recent “lower high” formation and, therefore, we do not hold this name in our model.

 

 

Buy AGL & Sell Call Options

Posted on | by Leon Hinde | Leave a Comment on Buy AGL & Sell Call Options

Our Algo Engine triggered a buy signal in AGL on the 22nd August at $22.64.

Considering the recent “higher low” formation at $24.00, we recommend investors add AGL to their portfolios.

AGL is a current holding in the ASX 50 model portfolio and we’ve added a covered call option to enhance the yield.

AGL pays a 41 cent in dividend on the 23rd of February.

AGL

Sydney Airport – Generating 10 – 12% cash flow

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With bond yields likely to stabilise and strong passenger growth numbers, (across Australia’s east coast), we see SYD as a buying opportunity.

We also recommend selling covered call options to enhance the yield.

SYD is expected to release full year traffic numbers in late January 2018.

Sydney Airport

Wesfarmers – Full Value (Sell Call Options)

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Wesfarmers (WES) has agreed to sell its Curragh coal mine in Queensland to US miner Coronado Coal Group for $700 million plus a value share agreement.

We suggest the company is likely to reduce borrowings to some degree, as earnings have been reduced, and subject to franking credits may return capital to shareholders.

We believe a reasonable strategy is to sell $45.00 June call options for $1.02 credit and expect to keep exposure to the $1.03 dividend declared on the 20th February.

Wesfarmers