Oil Search is a current holding in our ASX 100 model portfolio.
We continue to rate OSH as a buy within the large cap oil and gas space. The strength of its earnings and quality of its growth profile should deliver long term shareholder value.
The market remains too conservative on the upside potential of the PNG expansion and optionality on Alaska projects.
Value at $7.25 – $7.50 as an entry point.
Spot iron ore prices have rallied in the past days on the news of a second catastrophic tailings dam failure at a Vale-owned mine in Brazil.
Exceptions of reduced supply impacting the market, has driven up short term spot prices. Although, Iron Ores prices have been on a steady climb since the November low.
Long-term Iron Ore price chart.
We remain cautious of a potential pullback in RIO, BHP and FMG following the run up in prices and Algo Engine sell conditions.
Our preference continues to be in the energy names with OSH and WPL our core exposures.
Our Algo Engine has the following group of REITs under buy conditions CHC, DXS, GMG, GPT, LLC, SCG, & VCX. These names all sit in the ASX 100 model portfolio.
Chart Hall Group is the best performing REIT within our models, up 54% after holding it for 574 days.
REITs have performed very well in recent weeks, due to the moderating outlook for bond yields. If yields remain under pressure, defensive asset
classes, such as A-REITs and utilities will outperform through 2019.
A slowing global growth picture, low bond yields, rising equity market volatility are generally seen as positive catalysts for defensive sectors. The recent run up in these names means much of the value has already been captured. Therefore, we recommend investors use covered call options to enhance the income return.
As an order of preference, we feel large scale logistics, followed by office and then residential.
EPS growth for the sector is running around 4 -5% and dividend yields are near 5% also. Add a covered call and you’re able to achieve 10% annualised cash flow.
For more detail on covered call strategies please call of our office on 1300 614 002.
CHC
SLF Property ETF
WHC is under a current Algo Engine buy signal.
Technically, we see support building at $4.20 and a new higher low developing as buyers chase the positive momentum.
Short term traders should consider WHC with a stop loss below $4.23.
CYB is under Algo Engine buy conditions and we draw your attention to the higher low formations and buying interest, ahead of the AGM next Wednesday.
We maintain our view that the Virgin Money acquisition will deliver long-term shareholder value, even so, applying a stop-loss below the support line is advised.
Evolution Mining shares dropped 5% yesterday after announcing gold production in the December quarter fell from 186k to 181k ounces.
Both Northstar and Evolution revealed higher production costs over the quarter.
EVN & NST remain in our ASX top 100 model portfolio whereas, NCM was removed. Looking forward, it is reasonable to expect NCM to be added, but at lower prices to where it trades today.
OZL is under Algo Engine sell conditions – OZL’s 4QCY18 production result was solid and the company has upgraded gold production for Prominent Hill.
We see a buy side opportunity approaching with NCM and we’ll update you on the next Algo Buy signal.
Santos reported stronger revenue growth with the lift in LNG sales, a highlight of the result.
The December quarter helped support a 19% increase in full-year sales, to a record $US3.7bn. Record LNG sales for Dec quarter of $US450mn.
Both Santos and Oil Search are current holdings in the ASX 100 model portfolio.
The charts below show the higher low patterns and the support levels for investors to watch.
STO
OSH
CIMIC is a current holding in the ASX 100 model portfolio. We originally recommend accumulating the stock at $42.50, back in November.
Chart from 26th Nov…
Updated chart as at 24th Jan
Our Algo Engine has a sell signal on the XJO and we also draw your attention to the sell signals in the large cap miners, BHP & RIO.
The lower high formations and subsequent sell signals occurred in these two names, well ahead of the sell signal on the index.
The charts below show selling pressure has gathered momentum, following flat production guidance and lower price realisation in 2019.
BHP
RIO
Ansell is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
ANN made a higher low formation at $22 and we see the potential for the stock to trade higher based on supportive macroeconomic data and moderation of raw material prices.
At 15x forward earnings and 3.2% dividend yield, the valuation is below historical averages. 2019 EPS growth should be around 6 – 8%.
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Investor Signals Pty Ltd
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