Our Algo Engine triggered a recent buy signal in Medibank Private and we’re looking for price action to find support near the current $2.80 level.
Note: Technical price gap down to $2.67, lower bound of the support range.
The S&P/ASX 200 Index finished the week up 0.7%. The best performer was the Materials sector, up 3.8% and worst performer was the Property Trusts sector, down 1.3%.
As the release of US quarterly earnings gets underway, the market is assessing if the expected 17% average EPS growth rate is being met. The bar is even higher for US banks, where the market is looking for earnings to increase 28% on the same time last year.
If you take out the capital markets business and the one-time events, JP Morgan, Wells Fargo and Citigroup have fallen short of expectations. Rising interest rates, market volatility and tax cuts have not produced stronger results and the banking sector sold-off overnight in new York trade.
Bank of America and Netflix will be key results during Monday’s session.
XJO
JP Morgan
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
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
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
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%.
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
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.
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.
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
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