Australian Banks – Sell Signals Remain Dominant

Posted on | by Leon Hinde

Our Algo Engine triggered sell signals across the domestic banking names back in June.

Since then, on average, the group has sold off approximately 15% and on a 2-year basis, the sector is now down more than 30%.

ANZ announced this week, that its 2H18 cash earnings will be adversely impacted by $711m of after-tax charges related to legal costs and customer remediation from the Royal Commission.

ANZ releases their full-year NPAT on October 31st.

A second sector risk yet to play-out, is the potential for deteriorating credit quality. This risk has been exacerbated over recent years by “add backs”, where short term earnings are improved through lowering the provisions for bad loans.

Looking ahead, CBA chief Matt Comyn will face the royal commission on Thursday morning, followed by WBC’s Brian Hartzer Thursday afternoon and ANZ’s Shayne Elliott on Friday.

 

SCG & SYD – Approaching Oversold Levels

Posted on | by Leon Hinde

During the recent run-up in US interest rates, yield sensitive names have faced heavy selling pressure over the last 8 weeks.

However, as a “risk off” wave now appears to be hitting equity markets, it’s likely bond yields will consolidate, and in the process provide some selling reprieve for the yield sensitive names.

SCG and SYD are two examples where we now feel the prices reflect good value.

Sydney Airport

Scentre Group

Lend Lease Is Nearing The Buy Zone

Posted on | by Todd

Our ALGO engine triggered a buy signal for LLC last Friday at $18.70.

We mentioned in our commentary that investor support should emerge near the $18.00 support level; the low for today has been $18.02

From a technical perspective, internal momentum indicators have reached an extremely oversold level and a price reversion higher looks likely from here.

We see the first level on upside resistance near the October 2nd high of $19.60.

Lend Lease

The Sky Is Clearing For Flight Centre

Posted on | by Todd

After getting some bad press about excessive pricing, shares of Flight Centre have slid over 25% lower during the last 6 weeks and reached an 8-month low of $50.25 last Thursday.

Our ALGO engine triggered a buy signal last week and the internal momentum indicators are reflecting an oversold reading.

At the current price, FLT shares are trading at just under 16X forward earnings and the company has announced they will retain their $3.20 FY2019 annual dividend.

As such, we see good investor value in the stock with an initial upside target of $65.15.

Flight Centre

 

Keep Transurban On Your Radar

Posted on | by Todd

Shares of TCL have dropped about 10% over the last month since announcing a $4.8 billion capital raising related to the WestConnex project.

The share price suggested has been $10.80, which is just 10 cents below last Thursday’s intra-day low.

From a broader perspective, we believe the 25.5% ownership of the WestConnex project will underscore TCL’s status as Australia’s dominate toll road operator, support future cash flow and secure their dividend growth.

We don’t currently have an ALGO buy signal for TCL, but would not be surprised to see one soon.

Our medium-term target for TCL is in the $13.00 area.

Transurban

 

Flight Centre & Webjet

Posted on | by Leon Hinde

Our Algo Engine has generated buy signals in both Webjet and Flight Centre over recent days. We continue to like the supportive earnings backdrop for  WEB & FLT and therefore, we’re adding these names to our watch list.

The charts below show the slightly discounted entry levels we’re looking for.

Join our “Opportunities in Review” webinar on Monday to learn more about our high conviction ideas.

 

ALGO Buy Signal For Lend Lease

Posted on | by Todd

Our ALGO engine triggered a buy signal for LLC into Friday’s ASX close at $18.70.

This “higher low” pattern is referenced to the intraday low of $17.25 posted on April 27th.

Since reaching an all-time high of $21.70 on August 7th, the share price has dropped over 14% and traded to a 5-month low on Friday.

We believe the company is well positioned in the infrastructure construction space and its international expansion will diversify the risk of a slowdown in the domestic residential market.

At current levels, we calculate LLC is trading at about 13X FY 19 earnings and expect the stock will find investor interest above the $18.00 support area.

Lend Lease

 

AGM Reflects Headwinds For Bank of Queensland

Posted on | by Todd

Our ALGO engine has shown a sell signal for BOQ since August 31st at $11.50.

The share price got a boost at yesterday’s AGM trading up to $11.35 just after the FY18 NPAT data was released.

However, as the trading day progressed, the lower margins on the current loan book combined with large software write offs pressured the share price back below $11.00.

We still prefer the short side of BOQ with a downside target of $9.60.

Bank Of Queensland

OZL and Origin Removed From The Model Portfolio

Posted on | by Todd

Over the last 24 hours, our ALGO engine has triggered sell signals for both Oz Minerals and Origin Energy. 

Both OZL and ORG have been longstanding components in our ASX model portfolio.

As illustrated in the summary below, ORG returned a respectable 30.93% over the 584 day holding period and OZL returned a whopping 144.21% gain, including dividends, since July of 2015.

Both of these names have been popular with investors and we’ll update with current ALGO signals in the near-term.

Oz Minerals

Origin Energy