We recommend the short side of Orica heading into 2H18 earnings announcement on 7th May.
The market is looking for significantly stronger 2H performance and is likely to be disappointed. Orica is trading on stretched valuations and offers a 2.6% forward yield.
Look to sell within the range displayed below.
Orica
IPL reports 1H18 earnings on 9 May.
A key focus in the upcoming result will be the production performance at key locations & progress on formalising the Central Petroleum interim
gas agreement for Gibson Island and gas discovery JV.
IPL was added to our ASX50 model portfolio in May 2017.
Commodities are going through a topping pattern, or at least building resistance at the current level, we encourage investors to take profit in IPL.
2019 EPS $0.23, DPS $0.12 places IPL on a forward yield of 3%.
IPL
Following the recent Algo Engine buy signal, we view the “higher low” technical setup in Tabcorp as a bullish pattern.
From a fundamental earnings perspective, we also see the stock price strengthening into the August earnings result. We expect to the stock price supported by post merger cost savings and moderate organic growth.
Tabcorp
With resources looking fully valued and the banks unlikely to stage any meaningful recovery, we feel the XJO index is now approaching resistance.
6000 points is an area where we’ll be watching for selling pressure to increase.
ASX XJO Index
Following the Algo buy signal, S32 was added to the ASX50 model portfolio in February 2017 at $2.50.
The stock price rallied to $4.00 this year, then sold-off and created a “lower high” formation; an Algo sell signal was generated last week.
We continue our technological research in algorithm trading and remain encouraged by historical testing results.
We’re increasingly applying the rule -based model into our broader portfolio management style.
S32
Our Algo Engine triggered a recent buy signal in AGL and, with the stock price finding support at $20.50, we recommend investors add long exposure.
Our upside price target is $23.00.
AGL goes ex-div $0.54 on the 23rd August.
AGL
Our Algo Engine triggered a recent buy signal in Crown Resorts and, with the stock price finding support at $12.50, we recommend investors add long exposure.
Our upside price target is $14.00.
Crown goes ex-div $0.30 on the 21st September.
Buy Crown Resorts
Our Algo Engine triggered a buy signal in CIMIC Group and with the stock price finding support at $44, we recommend investors add long exposure. Our upside price target is $48 – $50.
Sydney Airports reported March quarter traffic growth of 6%, with International up 11% and domestic up 3.5%.
Total passenger volume was up 4% on the same time last year.
We’re comfortable buying SYD and selling a $7.00 call option to enhance the yield.
A combination of the dividend and the option premium is generating 10%+ cash flow on an annualised basis.
SYD goes ex-div on the 29th June for 16.5 cents per share.
The S&P/ASX 200 Index finished the week up 0.7%. The best performer was the Materials sector, up 3.4% and the worst performer was the Financials sector, down 1.0%.
The XJO Index has formed a “lower high” formation at 5900. The cascading lower highs in 2018 continue, which is generally a bearish price pattern.
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