ASX Markets

Graincorp reported FY17 EBITDA  of $390m, up 53% on last year, but below market expectations. The market was looking for a stronger result given the largest east coast crop on record.

Storage & Logistics disappointed, as did the failed synergy targets from its’ Oils investment to date.

Looking out 12 months, we see FY18 earnings per share lower but the dividend remaining steady at $0.30 per share, placing the stock on a forward yield of 3.5%.

Our Algo Engine flagged a short signal under the lower high formation on the 9/11/2017, when GNC was trading at 8.76.

We hold Sonic Healthcare in our ASX 50 model portfolio, following recent Algo Engine buy signal.

FY18 net profit is likely to be around $470m  on $5.5b in revenue, if we assume 5% EPS growth in FY19 and FY20 we get to a forecast net profit of $520m in FY20.

The above growth will see dividends expand from the current $0.77 per share, to $0.86 in 2020.

Like many top 50 companies, we see Sonic as a defensive contributor to portfolios but hardly at compelling value.  It’s only when adding a covered call option that the risk return scenario starts to add up.

We allow moderate capital growth and look to sell $22.50 calls on the other-side of the March dividend, helping us to drive 10 – 12% cash flow from SHL on an annualised basis.

Our Algo Engine recently triggered a sell signal in GMA and we now expect to see price weakness below the recent $3.17 high.

SYD reported October 2017 traffic with total passenger growth of +3.8%. International growth was up +5.8%, while domestic growth was up 2.8%.

Strong international traffic growth should continue to underpin dividend per share growth of 2- 3%.

Sydney airport is trading near full value and investors should add a covered call option to enhance the yield.

We hold SYD in our ASX 50 model portfolio.

CBA has a lower high structure and we see price resistance near the current trading range.

We’ve been warning on the outlook for AZJ based on the high payout ratio and earnings headwinds. The Algo Engine recently triggered a sell signal at $5.25 and we’re now beginning to see the price action roll over.

WPL is making a higher low formation and we view the $31 range as a buying opportunity.

Stop-loss below $29.50.

The S&P/ASX 200 Index finished the week down 1.2%. 

The best performer was the Information Technology sector, up 1.9% and the worst performer was the Energy sector, down 2.1%. 

Our Algo Engine generated a buy signal in Westpac yesterday, following the recent price retracement from $33.65 to $31.61.

We see limited earnings growth for the banks and recommend investors overlay an out-of-the-money call option to enhance the cash flow.