Following a 10% correction from the April peak, the NASDAQ is now under Algo Engine buy conditions. This is the first of the major indices to switch from sell to buy.
XJO, S&P500 & Dow Jones Index all remain under Algo Engine sell conditions. The conclusion we draw from this is, the bounce in technology may be short lived.
Boral shares offer further upside as they recover from oversold conditions.
Based on FY20 earnings we assume Boral will generate $6bn in revenue and grow net earnings by 8% to $570mn. This places Boral on a low PE multiple of 10x earnings.
We have the stock now trading on a 5.5% dividend yield.
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OceanaGold is under Algo Engine buy conditions and we see support building at $3.90
Lower interest rates tend to lift gold, as it reduces the opportunity cost of holding the non-yielding bullion.
Gold is now trading at US$1,310 per ounce.
Melco has agreed to purchase 19.99% of Crown Resorts at A$13.00 in two equal tranches on 6 June 2019 and on or prior to 30 September 2019.
The stock is being purchased from the Packer holding.
Melco’s price implies 10x EBITDA for the Perth & Melbourne casinos. It implies about $1.7bn for the Sydney casino which has a net build cost of $1.5bn.
Buy Crown at $12.30
Almost half of the stocks in the major US indices are already in bear territory and we’re now beginning to see the late stage selling in the remaining “high quality” group.
The graphs below of the US indices are under algo engine sell conditions and more recently, (past 10 days), the short-term momentum indicators are now pointing down and supporting the big picture back drop.
Interestingly, the Australian market has held up well, and the explanation lies in the surprise post election rally. Our concern is the sell-off in the ASX may soon catch up to the US.
Dow Jones
S&P500
NASDAQ
Australia and New Zealand Banking Group is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
We see support at $26 and a push higher towards $28.50, will provide an opportunity to sell covered call options to enhance the income return.
ANZ goes ex-div, $0.80 on the 14th of May. An August $29.50 call option will add a further $0.50 per share of income.
For more detail on the call option strategy, please call our office on 1300 614 002.
National Australia Bank is under Algo Engine buy conditions and was added to the ASX 100 model portfolio on Friday.
We now have ANZ, NAB and MQG under buy conditions.
OZ Minerals is under Algo Engine buy conditions and we add this name to our watch list. Early buying support is building just above the $9.00 price level.
OZL goes ex-div $0.08 on the 31st August and the stock trades on a forward yield of 2.7%.
The Star Entertainment Group looks oversold and we expect to see buying interest build.
SGR goes ex div $0.13 on the 13th of August.
Aristocrat Leisure reported a strong 1H19 result with the North American division the standout. The result also benefited from a lower AUD/USD exchange rate. Normalised profit after tax $422 + 16% in reported terms and +7.7% in constant currency. Up from $361m the same time last year.
In FY20 we forecast revenue to grow by 8% and EPS growth at a similar level. Based on this, we have ALL on a forward dividend yield of 2.2%.
Risks to the business include increased regulation, competition and slowing
customer demand. We look to buy ALL on the next Algo Engine buy signal.
The company goes ex-dividend $0.22 on the 29th of May.
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