Aurizon Holdings

Posted on | by Leon Hinde

Aurizon Holdings FY20 earnings beat expectations with EBIT of $910m, this was within the mid point of FY20 guidance of $880-930m.

FY21 EBIT guidance was 6% lower than consensus. Forward yield remains attractive at 5.%. Little in the way of EPS growth and a 100% dividend payout ratio provides a cap to the upside.

AZJ has initiated a new $300m on-market buyback which will help underpin the stock price. This is a good candidate for an at-the-money buy-write to drive portfolio cash flow.

REA – Sell

Posted on | by Leon Hinde

FY20 EBITDA of $492m was 5% below the same time last year. 36 x FY22 earnings looks expensive.

Good news is priced in and risks are now skewed to the downside. We add REA to our short sell list. Forward dividend yield 1%.

US Earnings

Posted on | by Leon Hinde

Q2 earnings for the S&P 500 are expected to decline by 44%, the worst drop since the fourth quarter of 2008, when profits fell 67%.

This week we’re watching the following results.

Monday Marriott International

Tuesday

Wednesday Cisco

Thursday Bristol-Myers.

Friday Applied Materials

NASDAQ remains above the 10-day average.

Seek – Sell Signal

Posted on | by Leon Hinde

Seek is under Algo Engine sell conditions and we remain on the short-side of the trade.

Two negatives we focus on;

1}Surprise need to raise money in the bond market; and

2} Announcing they were dumping the final dividend in a bid to preserve capital, blaming the “uncertain environment” for the decision.

Model Portfolio – July Update

Posted on | by Leon Hinde

For more information on our Algo Model Portfolio service, please call 1300 614 002.

Disclaimer: The above charts illustrate the simulated historical time-weighted rate of return, (TWRR), of applying our algorithm-based investment model over ASX ETFs, ASX100 & US S&P100 listed securities. Past performance is no guarantee of future returns.

ASX – Trading Volumes

Posted on | by Leon Hinde

ASX is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

July trading volumes show cash market: 32.5m, (lower than the 12-month average of 38.4m) and total value traded in July rose to $140.5bn, (July 2019’s $126.8bn).

Derivatives total of 8.6m contracts, down 22% on a year ago and much lower than the past 12-month average.

Volumes are expected to remain below the elevated levels of the past few months.

ASX is a quality business and we look to add to the position at lower price levels.

Resmed – Q4 Earnings

Posted on | by Leon Hinde

ResMed is under Algo Engine buy conditions and is a current holding in our ASX top 100 model portfolio.

RMD announced 4Q20 earnings, which were better-than-expected, underpinned by robust COVID-19 ventilator demand. However, modest revenue growth is expected in the near-term, implying limited near-term growth.

The 40x PE multiple looks too rich for the current earnings outlook. The forward dividend yield is 1%.

We suggest waiting for the next Algo buy signal to re-enter RMD on a pullback. Our new entry target is $22.

CIMIC – Buy

Posted on | by Leon Hinde

Cimic Group

The company is currently authorised to purchase up to 32,372,676
shares under the buy-back. The remaining shares that may still be
bought under the buy-back would be up to 25,659,911.

Support at $20 is now building and the short-term indicators have turned positive.