Recent Algo Signals
We continue to like the setup in CTX, WOW and IPL. We also feel that TCL and SYD are now approaching oversold levels.
Chart Update – GE
Our Algo Engine triggered a sell signal in GE back in December 2016.
At that time GE was trading at or near $32.50 and since then the stock has sold off and is now trading $26.00.
Caltex – Price Support
FY17 refining margins have improved from last year after averaging US$12.40 versus US$10 over 1H16.
We expect CTX stock price to find support at the current price level and trade higher off the back of the earnings result announced in August.
Assuming DPS of $1.15, we have CTX on 3.7% yield, and when complimented with a covered call, we ‘re delivering 10 – 12% annualised cash flow.
Chart Update – XJO
The S&P/ASX 200 Index finished the week down 0.31%. The best performer was the Materials sector, up 2.1% and the worst performer was the Health Care sector.
The XJO remains below the recent 5850 “lower high” formation, as displayed on the graph below.
Algo Buy Signal – Transurban
Our Algo Engine has flagged a buy signal in TCL with the price trading at or near $11.60.
With a 10% underlying dividend growth supported by free cash flow, we feel TCL should trade back up into the $12.25 level, as bond yields retrace from their current short-term rally.
Sydney Airports – Approaching Buy Signal
Sydney Airports is approaching buying support at or near $6.60. We see anywhere in the $6.60 – $6.90 range as a reasonable entry level.
Adding covered calls into Sept – Oct will help boost cash flow, whilst waiting for the next dividend period in late December.
ASX – Second Half Activity Trends
Weaker than expected activity trends in June led to small earnings downgrades by most analysts.
We are now forecasting flat year over year revenue growth.
ASX is trading on 24x forward earnings which seems excessive considering the low growth outlook.
Real Estate Sector – Now Oversold
As bond yields have pushed higher in recent weeks, following global central banks hawkish tone, we’ve seen capital rotate out of yield sensitive names such as infrastructure and property and into financials & resources.
The rotation now leaves property stocks approaching an oversold price zone.
The chart below provides a broad-based picture of the listed property stocks within the ASX 200, via the SLF.AXW (SPDR ASX200 Listed Property ETF).
Our Algo Engine has triggered a buy signal at or near $12.00.
Strong Buy Signals
Woolworths, Woodside, Medibank & Origin look like they’re setting-up as strong buy signals.
Other names which we view favourably from recent ALGO alerts include, SYD, TCL & GPT.
Algo Buy Signal – Magellan Global Equities Fund
Our Algo Engine has triggered recent buy signals on Magellan Global Equities Fund and Magellan Infrastructure Fund.
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