Alumina – Rallies 15%
Alumina is under Algo Engine buy conditions and we flagged the recent entry off the $1.55 support.
The stock has now rallied 15% and is trading at $1.81 today.
TPG – Accumulate
TPG Telecom offers value at around $8.00 and we suggest investors accumulate the stock.
Goldman Sachs – Q2 Earnings
Goldman Sachs Group remains under Algo Engine sell conditions.
Goldman reported Q2 revenue of $13.3bn & $2.4bn in profit. Estimates were for $3.78 in EPS and the number came in much higher at $6.26 earnings per share.
The report came out before the bell last night and GS was up 5.5% yet at the close, up only 1.3%.
Banks with exposure to trading revenue have seen strong market conditions in the June quarter, however, it’s likely that trading revenue will slow down in the back half of 2020.
Goldman set aside a higher than expected, $1.59bn for potential credit losses.
We continue to have a cautious outlook on the sector as we head into the remainder of 2020, downside risks remain from the economic uncertainty and the significant pressure from low-interest rates.
JP Morgan Q2 Earnings
JP Morgan posted a record $33.8 billion in second-quarter revenue and $4.69 billion in profit for the period.
The firm set aside $8.9 billion for expected loan defaults across its operations.
Jamie Dimon told analysts, If a relatively benign scenario emerges, JP Morgan will have too much capital saved and could resume stock buybacks as early as the fourth quarter. If a more severe recession happens, caused by a second wave of infections in the fall, the bank could be forced to cut its dividend.
Federal stimulus programs have supported individuals and small businesses in the second quarter, masking the true impact of the pandemic. It, therefore, seems reasonable to expect further deterioration in bad loan provisions.
A break below $90 in JPM will be seen as a loss of upside momentum.
Pepsico – Earnings
PepsiCo reported 2Q 2020 earnings and whilst EPS was ahead of consensus estimates, it still shows YTD down 12%.
SPDR Global Dividend Fund
SPDR S&P GLOBAL DIVIDEND is under Algo Engine buy conditions and is a current holding in our ASX “All ETF Model”.
We see value near $15
Treasury Wines – Earnings
Treasury Wine Estates remains under Algo Engine sell conditions.
FY20 EBIT guidance of $530-540 million is below consensus. The outlook for FY21 earnings has deteriorated, which is likely to weigh on the share price.
Northern Star – Production Update
Northern Star Resources provided 4QFY20 trading update with production at 267 k/oz and sales 263 k/oz. Kalgoorlie and Jundee offset weaker results at Super Pit.
NST will resume dividend payments and the balance sheet improves following the paydown of $200m of debt.
FY21 dividend yield increases to 2% with forecast EBIT of $1.2bn
We have a price target on NST of $15.50
Alumina – ATO Dispute
Alumina has run into issues with the Australian Tax Office following a review of transfer pricing arrangements with the AWAC JV.
The claim relates to a 20 year period and the ATO is claiming an additional tax of $200M plus interest. Other penalties may also be due and will be further communicated to the JV next month.
We forecast FY21 EBIT to increase to $350m, supporting a forward yield of 6%.
REA – Profit Taking
REA Group is under Algo Engine sell conditions. We expect selling pressure to increase at $109.
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