Share Buybacks Underpin US Stocks In August

Posted on | by Todd

This month was the best August for the NASDAQ index since the Dotcom bubble 18 years ago.

Both the SP 500 and the DOW Jones 30 indexes posted their best August performances since 2014.

More specifically,  Apple shares gained 20% and Amazon shares rose 12.5% during August. Together, these two names accounted for 25% of the entire NASDAQ gain last month.

It’s worth noting that share buyback programs for US listed stocks have increased over the last three years and are on track to reach $800 billion this year.

As illustrated in the chart below, August is usually the busiest month of the year for repurchasing stock and the pace drops off during September and October.

With US stocks at record highs and the local ASX index near a 10-year high, we urge investors to approach the market with caution at the current valuations.

Using our ALGO engine, we employ technical indicators to identify stock specific opportunities across a broad market spectrum during all market conditions .

Give us a call on 1-300-614-002 to discuss our current model portfolio holdings.

 

 

 

 

 

Ramsay Healthcare – FY18

Posted on | by Leon Hinde

Ramsay Healthcare reported FY18 results in-line with market consensus, however, the FY19 guidance was below expectations.

Underlying earnings increased 7% in FY18 and that growth rate is likely to slip to 4 – 5% in FY19. With the stock on a forward yield of 2.7% we see further downside risk to the share price in the short-term.

RHC is a high quality business and we’ll be watching for the next Algo Engine buy signal.

Material earnings benefits from new hospital  projects are expected in the coming years; we see both Healthscope and Ramsay Healthcare as long-term value plays with a defensive yield.

Buy Healthscope today and remain patient for the entry condition into Ramsay.

 

Unibail-Rodamco – 1H18

Posted on | by Leon Hinde

URW reported 1H18 earnings of €6.61 per share, which was ahead of market consensus forecasts.

Full year guidance 12.75-12.90 per share was maintained for the combined entity and synergy cost saving targets were upgraded.

URW will be looking at 3 billion + in asset sales as they rationalise their portfolio, post the Westfield acquisition. Progress on this front, along with more detail in the next earnings update, should help to drive further share price appreciation.

Group EPS growth is forecast at 5% and the the stock is now on a forward yield of 6%.

Unibail-Rodamco

Westpac Gets A Lift From Higher Rates

Posted on | by Todd

Our ALGO engine triggered a buy signal for WBC on Monday’s ASX close at $27.76.

This “higher low” price pattern is referenced to the low of $27.24 posted on June 14th.

WBC shares got a lift yesterday after investors reacted positively to the bank’s out of cycle increase of variable rate mortgages.

Effective September 19th, WBC will impose a 14 basis point increase to all standard mortgages, which will lift the rate to 5.38%.

In previous postings, we have cited  compressed margins and decreasing loan creation as a potential headwind for the banking sector and consider the recent upside price action as corrective in nature.

We expect the other major banks to follow WBC’s lead and lift variable mortgage rates over the next few days.

Westpac

ALGO Update: Stay Long Woolworths

Posted on | by Todd

Our ALGO engine triggered a buy signal for WOW on August 23rd at $28.25.

Since then, the share price has has traded in a relatively narrow range between $28.80 and $28.20.

The technical picture has improved and internal momentum indicators are now in oversold territory.

We see good support in the $28.00 area with an upside target near $30.00 over the medium-term.

WOW goes ex-dividend for 50 cents on September 13th with a special dividend of 10 cents, for a total of 60 cents.

Woolworths

ALGO Buy Signal For AZJ

Posted on | by Todd

Our ALGO engine triggered a buy signal for Aurizon Holdings on Tuesday at $4.24.

This “higher low” chart pattern is referenced to the low of $4.10 posted on June 13th.

AZJ’s FY2018 results, which were released last week, showed a modest 1% decrease in revenue from last year, but the underlying EBIT of $940 million was up 6% from 2017.

With a total dividend of 27 cents, the stock has an effective yield of 6% at current prices.

We expect the initial price target of $4.60 to be reached over the medium term.

AZJ

ALGO Update: CTX Continues Slide Lower

Posted on | by Todd

Shares of Caltex have dropped over 10% this week, posting a 3-month low of $30.10 this morning,  as investors continue to sell the stock after a disappointing 1H 2018 result.

The worst part of the report was that the fuel division posted a $314 million profit, which is below the lower end of the company’s $315 to $335 million guidance.

In addition, corporate costs rose to $31 million compared to $21 million at the same time last year, which prompted a lowering of the interim dividend from 60 cents to 57 cents.

Our ALGO engine triggered a sell signal for CTX on June 26th at $32.68.  We see scope for a key support area near the $29.00 area.

Caltex

 

 

 

ALGO Update: NCM & EVN

Posted on | by Leon Hinde

NCM reported a strong earnings result and forward guidance will be supported by higher revenue and lower costs.

Gearing is now at 12% and with gold prices likely to rally from the current oversold levels, we see scope for NCM and EVN to find buying support in the near-term.

Both stocks have gone ex-dividend today and paid 15 cents and 4 cents, respectively.