Real Estate Investment Trusts – Outperform

Posted on | by Leon Hinde

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

 

 

CYB – AGM on 30th January

Posted on | by Leon Hinde

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.

Gold Miners – Large Cap

Posted on | by Leon Hinde

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 – Delivers Top Line Growth

Posted on | by Leon Hinde

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

 

BHP & RIO – Now Under Sell Conditions

Posted on | by Leon Hinde

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 – Supported by Share Buy Back

Posted on | by Leon Hinde

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%.

 

 

 

Webjet – Valuation Review

Posted on | by Leon Hinde

Our Algo Engine triggered a “sell” signal in Webjet on Monday and after taking  a closer look at the financials, there’s reason to add this one to your watch list.

It appears the market is now starting to factor in a meaningful deceleration in the revenue & earnings trajectory. Original expectations were for Webjet to continue growing revenue at 13 – 17% but headwinds in 2019 and 2020, make this unlikely.

With the stock trading 32x FY18 and 25x 2019, we see little room for disappointment in upcoming earnings and future guidance.

Run a stop-loss above $12.50 and watch the short-term momentum indicators.

 

 

Telstra – Is 2019 The Year to be a Buyer?

Posted on | by Leon Hinde

InfraCo is still a key part of Telstra’s business strategy and they’re making major investments in infrastructure.

Telstra will upgrade its huge network of submarine cables. The overhaul will increase the capacity of the lines and allow Telstra to carry half as much data again, as they do now. Helping to secure Telstra’s position as the largest network of subsea cables in the Asia Pacific region.

High quality subsea cables are essential because they link Telstra Australia to the rest of the world.

In recent years Telstra has been making “lower lows & lower highs”, reflected in the Algo Engine sell conditions. We feel 2019 will produce the first “buy signal” in over 2 years.