Our Algo Engine generated a buy signal recently in OZ Minerals, with the stock making a higher low at $8.80.
OZ Minerals key asset is a copper mine at Prominent Hill in South Australia. Further expansion in nearby mine at Carrapateena will start in late 2019.
FY18 EBITDA will likely be around $550m and the stock trades on a forward yield of 2%.
We consider OZL a high risk opportunity and encourage investors to apply a stop loss on a break below $8.70.
Shares of ASX oil names are under pressure in early trade as West Texas Intermediate Crude Oil (WTI) prices dropped over 4% overnight.
WTI prices fell by close to $4.00 per barrel to $70.40 as a confluence of bearish news hit the market.
Increased trade friction between the US and China pushed WTI lower in Asian tarde, while news that Liyba and Saudi Arabia have increased production by a combined 800,000 barrels per day pushed the market through key support levels.
As illustrated in the chart below, WTI has rallied more than $10.00 over the last 5 weeks, which now places initial support $3.00 lower near $67.00.
Similarly, local oil names, OSH, STO, WPL and ORG have rallied over the last month and appear to have more downside price potential over the near-term.
OSH will announce their quarterly production report next Tuesday and STO and WPL will release their reports next Thursday.
We have traded both sides of these names over the last 12 months and will update with specific entry levels near lower technical support areas over the medium-term.
WTI Crude Oil
Origin Energy
Oil Search
Santos
Woodside Petroleum
Our Algo Engine generated a buy signal recently in CIMIC and we’re encouraged by the buying support which developed around the $40.50 level.
We continue to have a favorable outlook on the fundamental earnings backdrop for CIMIC and we expect next Thursday’s earnings announcement to further support the share price.
CIMIC goes ex-div $0.60 on the 12th September.
On May 30th, ORG was added to the ASX Top 20 index to replace the dissolved WFD entity.
Since many Super funds and managed equity firms have a mandate to hold a percentage of listed index shares, we expected ORG to get a boost from the listing.
Since then, the share price has risen by over 8% and posted a 3-year high at $10.27 on Monday.
ORG will release its Quarterly report on July 31st and it looks like the share price could slip lower in front of that announcement.
With the expectations of FY18 NPAT rising by up to 2.6%, we see scope for the stock to hold the $9.20 support level and reach the $10.60 price range after the quarterly report.
Origin Energy
Our Algo Engine triggered a buy signal in S32 recently at $3.60. With the stock creating a new “higher low” formation, it has now been added into the ASX Top 50 model.
S32 goes ex-dividend for 8 cents on the 14th September. Adding a November $3.80 call option will generate an additional 20 cents of income per share.
South 32
Our ALGO engine triggered a sell signal for AGL on May 2nd at $22.50.
At the time, we suggested selling $23.00 call options into September, so investors would receive increased cash flow as well as the 54 cent dividend on August 23rd.
Performance reports from both the Loy Yang A and Bayswater facilities have failed to generate strong buying interest and we remain neutral on the stock.
Daily charts suggest the next level of support for AGL is near $21.35.
AGL
Shares of Cimic Group continue to build on last week’s gains in the lead up to next week’s Half-yearly earnings report.
Since posting an intra-day low of $39.60 on June 6th, the share price has risen over 9%.
Our ALGO engine triggered a buy signal on June 1st at $40.73 and CIM is part of our ASX Top 100 Model Portfolio.
Next week’s report is expected to show NPAT at $341 million and a 62.4 cent DPS.
Daily price charts point to a medium-term target near $46.40.
Cimic Group
Our ALGO engine triggered a buy signal on CSR at $4.64 on June 15th.
The “higher low” pattern is referenced to the $4.36 low posted in November of last year.
Internal momentum indicators are beginning to firm suggesting solid investor support in the $4.50 area.
CSR will pay a 13.5 cent dividend in November and we see a medium-term upside target around $5.45.
CSR
Our ALGO engine triggered a sell signal on CTX on June 21st just above $31.25.
A recent broker note has updated its rating on CTX to “outperform” and given the share price a 12-month target of $37.00.
The share price has come under pressure over the last few sessions as last week’s fuel supply extension with Woolworth’s was expected to result in an $80 million reduction in CTX’s EBIT.
We expect the share price to find support around the $30.50 area and will update on specific buy levels in a future posting.
Caltex
Our ALGO engine triggered a sell signal on CBA into yesterday’s ASX close at $75.65.
The “lower high” pattern in the stock is referenced to the high posted at $77.50 on March 12th.
Subsequently, CBA has been removed from our ASX Model portfolio after being held for 148 days with a net gain of 1.52%.
Recent reports from both Citi and Morgan Stanley show the brokers have retained their sell ratings on CBA following its decision to demerge its wealth management operations.
Citi now has a downside target of $72.00 and Morgan Stanley is expecting the stock to drop over 15% to $64.00 over the next 12 months.
With this signal on Friday, our ALGO engine is now showing sell signals for all of the domestic banking names with the exception of MQG.
CBA
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