Ramsay Shares Slide After Failed Takeover Bid

Posted on | by Todd

Shares of Ramsay Heath care are down over 2% to $53.30 in early trade.

Last Friday, the private hospital group announced an unsolicited offer for almost a $1 billion to take over Capio AB, a European healthcare company.

Over the weekend, the Capio board unanimously rejected the deal.

Over the last 2 months, the RHC share price has dropped over 16%. Most of this negative sentiment is based on the company’s admission that earnings growth will contract from 8% to 5% over the next year.

At current prices, we see RHC on a 2.9% dividend yield. As such, we consider the stock near fair value and would look to acquire it at lower levels.

Ramsay Health Care

RIO – Likely To Boost Share Buyback Scheme

Posted on | by Leon Hinde

Our Algo engine generated a buy signal recently in RIO at $80.00 and the stock remains in our ASX50 model portfolio.

In the next 12 months, RIO will generate over $10 billion in free cash flow on top of the $7 billion+ from asset disposals. We anticipate the excess funds will be returned to shareholders though an increased share buyback program.

Of the existing $2.9b buyback, RIO has now completed $1.7b.

FY19 revenue $38b, EBIT $13b supporting a  forward dividend yield of 5.6%.

RIO has their June quarter production numbers out tomorrow.

Rio Tinto

 

 

 

Origin Energy – The “Higher Low” Pattern Continues

Posted on | by Leon Hinde

The uptrend in the Origin share price is well established and the stock now trades near full value.

We continue our buy-side interest, although we recognize a period of consolidation over the next 6 months is likely.

At the upcoming earnings result, we’ll be looking for commentary from the company on reinstating dividends and progress on the debt reduction program.

Origin is a recommended buy-write strategy within the ASX Top 50 model portfolio.

Consensus earnings forecasts are looking for 23% EPS growth supported by higher energy prices and ramp up of LNG revenue.

 

Woolworths Investor Update

Posted on | by Leon Hinde

Whilst the grocery industry’s profitability is improving, (as the industry becomes more rational), we’re cautious on Woolworths’ share price due to valuation concerns.

Industry analysis shows Woolworths sales momentum is slowing. With the stock now trading 23 x consensus FY19 earnings, on a forward yield of 3.3%, there seems little margin for disappointment.

We continue to track Woolworths for a new “higher low” formation, at which point the stock will be added into the ASX 50 model at a discount to the current trading range.

 

 

ALGO Buy Signal For Sydney Airport

Posted on | by Todd

Our ALGO engine triggered a buy signal for Sydney Airport into yesterday’s ASX close at $7.05.

The “higher low” chart formation is referenced to the $6.90 intra-day low posted on May 17th.

SYD has now been added to our ASX Top 50 Model portfolio.

As a medium-term strategy for investors, we are looking to buy SYD shares at current levels and sell the $7.25 Calls into March.

The option is current priced at 30 cents and SYD will go ex-dividend for 18 cents in late December. As such, this Buy/Write strategy would add 48 cents of value into client portfolios.

Sydney Airport

 

Algo Update – Buy OZ Minerals

Posted on | by Leon Hinde

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.

Local Oil Names Drop Sharply After WTI Spikes Lower

Posted on | by Todd

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

Buy CIMIC Group

Posted on | by Leon Hinde

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.