Aristocrat Leisure has created a “higher low” formation at $22.50, and we see scope for the stock to retest the recent high of $24.00.
Internal momentum indicators have turned higher, which suggests that broad investor interest has returned to the buy-side of the stock.
ALL remains in our ASX Top 50 model portfolio.
Amcor will provide an earnings update to the market on the 12th of February and we expect the recent sell-off to find buying support ahead of the update.
The short-term momentum indicators are still trending lower but we feel value is beginning to emerge and investors should continue to watch this name for a move higher.
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.
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.
We recommend investors add Brambles to their portfolio as an income play.
Buy the stock and sell $10.50 June call for $0.38 credit and keep exposure to the $0.145 dividend on the 8th March.
Brambles
We recommend investors buy Amcor at $14.90.
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
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
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.
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
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453