IPL – Growth on offer into FY20

Posted on | by Leon Hinde | Leave a Comment on IPL – Growth on offer into FY20

Our Algo Engine recently triggered a  buy signal in IPL, and with the stock now retesting the $3.50 low, we consider this a buy opportunity.

Nitrogen based fertiliser prices progressively weakened through the 1Q, which helps explain the recent share price weakness, however, phosphate prices have proven more resilient and IPL will also benefit from the lower US corporate tax rate.

Spot DAP prices at US$410/t are above most analysts financial model forecasts and with IPL’s earnings growth accelerating out into FY20, the stock now trades on FY20 yield of 5%.

FY20 revenue $3.6 billion, EBITDA $990 million and EPS $0.30. 

IPL

 

Aussie Dollar Dragged Lower On Tariff Fears

Posted on | by Todd | Leave a Comment on Aussie Dollar Dragged Lower On Tariff Fears

As tensions between the US and China escalate, Australia sits uncomfortably in between its biggest export market and its largest investor.

Government data show that almost 30% of all Aussie exports are sent to China, while the cumulative amount of US investments in Australia is over $850 billion as of the end of 2017.

In addition, US overnight interest rates are now higher than Aussie rates for the first time in over 18 years, and the domestic current account deficit has swelled to 2.2% of GDP

This combination of factors leaves the AUD/USD vulnerable to a protracted down move over the course of 2018.

Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate  by 2.5% for every 1% change in the AUD/USD exchange rate.

With a current price of $13.60, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January 2017 low of .7160.

BetsShare ETF: YANK

 

XJO – S&P/ASX 200 Road Map

Posted on | by Leon Hinde | Leave a Comment on XJO – S&P/ASX 200 Road Map

The S&P/ASX 200 index finished the week up 0.5%. 

The best performer was the Energy sector, up 3.3% and the worst performer was Utilities sector, down 1.9%. 

With global equity markets selling-off again in the overnight session, (following ongoing concerns around trade wars), index traders should stay short the market and run a stop-loss on a reversal back through 5806 on the XJO.

US large cap financials will kick-off March quarter earnings later next week and with solid earnings expected, we may see a late week reprieve in selling.

5630 will likely become a mid-week support level for the XJO.

 

Westfield Corp – Generating 10% income

Posted on | by Leon Hinde | Leave a Comment on Westfield Corp – Generating 10% income

Westfield has a take-over offer on the table from European giant Unibail-Rodamco for the equivalent of $10.00 per share.

A combination of a weak US dollar and a fall in Unibail’s share price has seen WFD trade below the initial offer. With the stock finding support at $8.50 we feel there’s a low risk opportunity to buy WFD and sell covered calls.

The strategy generates 10% annualised cash flow and allows for a moderate increase in capital growth.

WFD goes ex-div $0.165 on the 11th August .

Westfield

ALGO Buy Signal For Tabcorp

Posted on | by Todd | Leave a Comment on ALGO Buy Signal For Tabcorp

Our ALGO engine triggered a buy signal for TAH into yesterday’s ASX close at $4.22.

This “higher low” pattern is referenced to the $4.16 low posted on October 18th, 2017.

Since the company last reported earnings in February, the share price has dropped over 20%.

Technically, the price has reached oversold territory. Fundamentally, we feel investors are currently overlooking the cost savings of the newly merged company.

We believe TAH represents good value at in the $4.25 area and that shares will rally into the next earnings report scheduled in August.

TAH will also pay a 12.5 cent dividend in August, which pencils out to a 5.9% annual yield.

Tabcorp

ALGO Update: Stay Long Ingham’s Group

Posted on | by Todd | Leave a Comment on ALGO Update: Stay Long Ingham’s Group

Our ALGO engine triggered a buy signal for Ingham’s Group on December 18th at $3.42.

Now that Red Lea Chicken has been placed into voluntary administration, analysts estimate that ING’s 40% share of the domestic chicken market will grow by 1-2% and add 1.2% to EPS.

Based on those estimates, we see the share price rising into the $4.00 area over the medium-term.

Ingham’s Group

ALGO Buy Signal In Sims Metal

Posted on | by Todd | Leave a Comment on ALGO Buy Signal In Sims Metal

Our ALGO engine triggered a buy signal in Sims Metal Management into the ASX close yesterday at $14.25.

The “lower high” pattern is referenced to the $13.15 low posted in early November last year.

The share price of SGM has dropped more than 13% since announcing the acquisition of UK-based Morley Waste Traders to their existing 10 recycling sites across Europe.

We see solid technical support in the $14.00 area and scope for near-term move back into the $15.60 level.

Sims Metal Management

 

 

 

 

Medibank – Rising Political Risk

Posted on | by Leon Hinde | Leave a Comment on Medibank – Rising Political Risk

Medibank has been under selling pressure on fears of rising political risk.  The Labour Party appears likely to campaign into the next Federal Election with a promise to limit annual premium rate increases to 2% for two years. This is well below the 4-6% historical trend.

Despite the concern highlighted above, we view Medibank as a buying opportunity, as it approaches an oversold level.

A rally back to $3.00 should provide an opportunity to set covered call options and generate additional premium income to complement the 6.5 cent  September dividend.

Medibank Private

 

Harbour Energy Offers $13.5 Billion For Santos

Posted on | by Todd | Leave a Comment on Harbour Energy Offers $13.5 Billion For Santos

US-based, private equity firm Harbour Energy has raised it’s takeover offer to $13.5 billion for oil and gas producer SANTOS. 

This is the third offer since last August and pencils out to $6.50 per share.

The bid represents a 30% premium over last Friday’s closing price of $5.07 per share.

STO was added to our ASX Top 100 Model Portfolio at $4.82 on February 12th.

Santos