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
The recent drop in Tabcorp shares provides a low risk entry level where future earnings are underpinned by the $110 million synergy cost savings after the Tatts merger.
The FY19 revenue is forecast to be $5.4billion, EBIT $850 milion, EPS, $0.28 and DPS $0.23, placing the stock on a forward yield of 4.9%, (fully franked).
Our ALGO engine triggered a buy signal in TAH on February 13th at $4.47.
TAH shares have reached a high of $4.74 in early trade and we see the next resistance level near $4.90
TabCorp
Medibank delivered 1H18 NPAT of $245 million, which is an increase of 6% versus the same time last year.
Operating conditions are expected to remain largely unchanged and we expect revenue and underlying profit to remain flat in FY19.
With the stock trading 20x earnings and 4.1% yield, investors should add an at-the-money-call option to strip out the maximum cash flow from dividends, call option premium and franking credits.
Medibank
Star reported normalised NPAT of $120m, up 12% on the same time last year and revenue growth was strong, up 16%.
FY19 revenue is forecast to be $2.9b, EBIT $430m, DPS $0.16, placing the stock on a forward yield of 3%.
Investors should watch for the next Algo Engine buy signal in both Star and Crown as they approach a new higher low formation, which will provide a good entry level.
Star Casino
Crown Casino
Sonic Healthcare delivered 1H18 revenues of $2.7 billon, which was up about 8% versus last year.
Group EBITDA margin missed forecasts and therefore, at 21 x forward earnings and only a 3.4% dividend yield, we view SHL as full value.
The stock was removed from our ASX 50 model a few weeks back when the Algo Engine triggered a sell signal.
Investors looking for cashflow should look to buy SHL on a pullback below $23 and then sell $24 December call options; whilst remaining exposed to the Mar and Sep dividends along with collecting the added option premium.
This strategy delivers 12% cash flow on an annualized basis.
Sonic Healthcare
The ASX 200 finished the week up 1.1% with the Health Care sector up 5.2% .
Telecoms lost 1.8% and were the worst performing sector, .
The XJO is likely to find resistance within the 5950 to 6000 range displayed below.
ASX announced 1H18 core earnings of A$230m, which is ahead of market expectations.
Revenue grew by 6% and we have the stock now trading on a forward dividend yield into FY19 of 4.1%.
Underlying EPS growth has been upgraded to 5 -6% and full year dividend is $2.15, fully franked.
ASX is in the ASX Top 50 model portfolio.
ASX:ASX
CSL’s 1H18 underlying NPAT of US$1.05 billon was ahead of market expectations, driven by strong revenue growth.
Management increased FY18 guidance and we expect FY19 growth of 20%, or better.
CSL
We’ll review WPL, ORG, TAH, AGL, AMC, WFD, NCM, SYD, CBA, IAG, LNK & IVC.
The video runs for 5 minutes and if you’d like to discuss the ideas presented, please call our office on 1300 614 002.
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Investor Signals Pty Ltd
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