Caltex – Earnings Review

Posted on | by Leon Hinde

Caltex Australia is under Algo Engine sell conditions and was removed from the model portfolio late last year at $28.50.

Fuel retail margin was A$35-45mn lower at end-February, (based on the same time last year), driven by diesel pricing and gasoline retail competition. The company will provide a Q1 trading update at its AGM on 9 May 2019.

In FY20 we assume $25.5b in revenue and 4% increase in EBIT to $1.07b which flows through to $1.25 in dividends, placing the stock on a 4.5% forward yield.

For investors who are not taking up the buy back offer, we recommend selling  a covered call option to enhance the income return.

For more detail, please call our office on 1300 614 002.

 

 

Invocare – Offers Long-Term Value

Posted on | by Leon Hinde

InvoCare is under current Algo Engine sell conditions, following a recent lower high formation at $15.00.

Invocare’s balance sheet will be strengthened following the announced raising of up to A$85m, via institutional placement which will include $20m via a share purchase plan. We expect this to be done at around $13.30.

We anticipate the next signal to be a Algo Engine “buy” and we’re likely to see this before the end of April.

We see long-term value in IVC and suggest investors watch for an entry signal between $13.30 & $13.80

 

 

 

Woolworths – Valuation Review

Posted on | by Leon Hinde

Woolworths Group is a current holding in our ASX 100 model portfolio, as well as the ASX 20 & 50 models.

The stock is up over 9% including dividends after being added at $28.50 back in August last year. With the share price trading at 24x forward earnings and only a 3% dividend yield, we consider it expensive.

We suggest selling a long dated European call option to enhance the income. For more detail on the strategy, please call our office on 1300 614 002.

Amcor – Update on Bemis Transaction

Posted on | by Leon Hinde

Amcor has released the scheme booklet for its all-stock acquisition of Bemis with the transaction unanimously recommended by the Boards of both companies.

The Bemis transaction is expected to be completed on 15 May 2019.

AMC reported a solid 1H19 result in February and forecast underlying EPS growth of 3 – 4% supported by US$180m in cost synergies to be realized from the merger over the next 3 years.

Amcor trades on a 4.5% forward yield.  In FY20 we expect the combined revenue to exceed US$14b and EBIT to increase to US$1.7b.

We remain buyers at or near $14.50.

 

 

 

 

 

 

Seek – Ex-div 25th March

Posted on | by Leon Hinde

Seek is a current holding in our ASX 100 model portfolio. The stock goes ex-div $0.24 on the 25th of March and adding a covered call option will boost the annualized cash flow to 10%+.

Seek delivered recent earnings slightly ahead of market consensus and we consider the stock an attractive income contributor to client portfolios.

For more detail on the covered call strategy, please call our office on 1300 614 002.

 

 

CBA – Bank Review

Posted on | by Leon Hinde

CBA:ASX is under Algo Engine sell conditions, (as are all banks excluding Macquarie & ANZ), and we highlight the technical lower high pattern at $73.50.

CBA has announced they intend to suspend preparations for the demerger of wealth and mortgage broking business, with no time frame provided.  We feel this adds another layer of complexity with executing the business strategy to become a simpler, streamlined business.

CBA trades on 15x earnings and 5.8% dividend yield.

 

Suncorp – Weak Earnings Outlook

Posted on | by Leon Hinde

Suncorp Group is under Algo Engine sell conditions following  a lower high formation at $13.50.

We see reduced scope for Suncorp to reprice mortgages, given the
current political and regulatory climate, and we expect to see ongoing margin
pressure.

Stay on the short side and watch for the share price to trend lower with the 10 day average crossing below the 50 day average as a reference point.

 

Boeing – Sell Conditions For Now

Posted on | by Leon Hinde

Boeing is under Algo Engine sell conditions and with the current pressure on the share price, we expect to see a new higher low form. When the pattern is in place, we’ll  update you on the timing of the switch to buy conditions.

Investor Signals now operate US model portfolios for our clients and if you’d like to know more, please call our office on 1300 614 002.

Disclaimer: The table illustrates the simulated 5 year historical time weighted rate of return of applying our algorithm based investment model over the ASX100 & US S&P100 listed securities.