Keep TWE On The Radar, Look To Buy Lower

Posted on | by Todd

Shares of TWE have been trading actively since the release of their full-year results on August 15th.

It seems investors are weighing up the negative impact of increased trade tensions between the US and China against the positive bottom line news over the last year.

TWE posted a NPAT of $360 million for FY 2018, which was an increase of 33% on the prior year.

The strongest component of the report was in Asia, which reflected a 23% rise in volume and a 12% increase in net sales.

As such, the biggest risk for TWE is a material slow down in demand from their Asian customers.

On balance, we see scope for a pull back into the the $17.20 area and a medium-term upside target of $20.00

Treasury Wine Estates.

 

 

 

ALGO Buy Signal In OZR

Posted on | by Leon Hinde

Our Algo Engine generated  a buy signal in the ASX resource ETF with the symbol OZR at $10.30.

This “higher low” pattern is referenced to the $9.85 low posted on April 10th.

The OZR units  have a 53% weighting to a diversified portfolio of ASX listed metals and mining stocks.

Our initial target is in the $11.00 area.

OZR

BHP – Identifying The Buy Range

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal in BHP and we highlight in the chart below our preferred accumulation price range.

Escalating trade tariffs and concerns regarding a China slowdown are the obvious reasons for short-term price weakness in BHP’s share price.

We expect to see some sort of resolution in the trade disputes by the New Year, although pressure will likely remain  ahead of the US mid-term elections in November.

BHP

Higher Rates Won’t Help The Local Banks

Posted on | by Todd

It’s a long held belief among investors that rising interest rates are good for Australian banks in terms of enhancing their earnings.

But this is not necessarily true in the current financial environment.

Banks make money on widening interest rate and credit spreads; simply, the difference between their cost of money and the return on the loans they make to their customers.

For example, last week the ANZ and CBA increased their variable rate mortgages by 16 and 15 basis points, respectfully.

The banks have cited the sustained rise in wholesale funding costs as the reason for lifting rates even though the RBA has kept official lending rates unchanged.

On a valuation basis, we’re cautious of how the repricing of variable rate mortgages will offset the headwinds of higher funding and materially add to earnings growth or an expansion of loan creation.

Further, it’s likely that the local banks will face increased regulatory expenses from the royal commission, including tighter underwriting standards and disclosures of fees.

On balance, we see scope for the share prices of the domestic banks to test the lows posted in June before sustaining any protracted rally higher.

CBA

ANZ

 

 

 

Medibank – Entering A Value Range

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal in MPL on Friday.

With the share price retracing from a $3.39 high, (formed in February), to close at $2.89, we now draw your attention to MPL as it enters our value range.

MPL’s earnings report last month showed the company is struggling to grow revenue and bottom line profit, therefore 2019 will likely show flat to no growth.

However, with the stock on a 4.4% yield and adding a covered call option, 10 – 12% annualized cash flow can be generated without too much downside risk.

Look to accumulate within the $2.80 – $2.90 range.

BBOZ – Profiting From A Falling Market

Posted on | by Leon Hinde

The XJO has now sold off 4% in the last 7 days and the index is back at the same level it was in June.

BBOZ is an inverse ETF with a 2x leverage, therefore, in approximate numbers, BBOZ has increased 8% over the same period.

BBOZ allows investors to hedge a portfolio of ASX 200 stocks in one ASX listed transaction.

BBOZ

Keep CIMIC On The Radar

Posted on | by Leon Hinde

CIMIC was a stand out  during the recent earnings season with growth coming in well above market consensus, supported by large infrastructure spending.

We expect 2 – 3 years of above trend growth in CIMIC and see the current weakness as an opportunity to accumulate the stock.

Our buy range is $48.50 to $47.50.

Also keep an eye on any weakness in the share price of Downer EDI, as a buy on the dip opportunity.

CIMIC