Our Algo Engine triggered a buy signal in AGL back in July at $23.00.
We see the current retracement from $26 back to $24 as another opportunity to add AGL to portfolios.
We hold AGL in our ASX 50 model and we’re encouraged by the double-digit EPS growth outlook and the 5% dividend yield.
We’ve also added a covered call option to boost the cash-flow yield to 10 – 12% p/a.
AGL
South32 announced plans to run its South African Energy Coal (SAEC) business separately from the rest of the company from April 2018.
We see this announcement as a net positive for shareholders.
Risks to South 32’s earnings relate to their exposure to commodities which have performed strongly over the near term.
S32 trades on a forward yield of 4.1% and we hold the stock in our ASX 50 model.
South 32
Our ALGO engine triggered a buy signal in QAN last Friday at 5.60.
Since posting a 52-week high at $6.53 on October 18th, QAN shares have traded down to a low of $5.57 last Thursday.
Technically, the share price is still tracking a “higher low” pattern which is bullish and suggests the recent sell off is a correction within a broader uptrend.
the company is currently trading on a P/E of 13X and will likely improve on the FY 17 after tax profit of $853 million announced back in October.
QAN is also one of the ASX companies that will benefit from a weaker Aussie Dollar as inbound tourism is likely to increase.
Over the near-term we are looking the share price to reach the $6.25 area.
QANTAS
Our Algo Engine generated a recent buy signal in AMP.
With the price action finding support at $4.75 and now trading into the $5.15 range, we continue to see upside momentum.
AMP looks well positioned to benefit from domestic trends in mandated super and search for yield in infrastructure & property.
AMP is currently in our ASX 20 and ASX 50 model portfolios.
AMP
Our ALGO engine triggered a buy signal on TWE back in early July at $12.55.
Since then the share price has added close to 20% closing Friday just over $15.80.
The company, with a market cap of $11.11 billion, recently declared a final dividend of 13 cents per share, 50% franked, bringing the total dividend for FY17 to 26 cents per share, a yearly increase of 30%.
TWE has a portfolio of more than 70 brands, including Penfolds, Pepperjack and Lindeman’s, with sales operations in more than 70 countries.
French wine growers have suffered recently on the back of unfavorable weather which has resulted in vineyards in wine-growing regions such as Bordeaux and Champagne being damaged by frost.
As a result, the French Agricultural Ministry has reported wine production will fall by about 20%, leading to the lowest level of output in more than 60 years.
In addition to the strong sales growth in Asia, we consider the lower European wine production as a bullish development for TWE and expect further share appreciation into the end of the year.
Treasury Wine Estates
The S&P/ASX 200 finished the week up 0.43%.
The best performer was the Energy sector, up 2.3% and the worst performer was the Utilities sector, down 2.4%.
We assume no change to S32 earnings guidance but will review commentary on 5 December when S32 is set to host a capital markets day in Perth.
We expect management to update production guidance for its core operations for FY18.
FY18 revenue should be flat on FY17 at $7b and EBIT will also be in-line at $1.7b. We have S32 trading on a 4% forward yield
We see the potential for earnings upgrades should spot metal prices stay at current levels. Strength in alumina, manganese, coking coal and thermal coal is helping to underpin our outlook.
The price of West Texas Intermediate (WTI) Crude Oil hit a 2-year high of $58.40 in NY trade yesterday. For the month of November, the price of WTI has rallied over 10%.
Much of the bullish trade has been driven by comments from OPEC members that the cartel will be able to extend their oil supply curbs put in place earlier this year.
Currently, OPEC, Russia and nine other producers have reduced oil output by 1.8 million barrels per day. Crude Oil prices have firmed on the expectations that they will extend that agreement beyond March 2018 when they meet in Vienna next week.
If they are successful in extending the deal, it would give Crude Oil prices an additional lift towards the $60.00 area.
Shares of WPL traded to $33.35 on November 7th.
News of Shell Oil divesting from the company triggered a sharp $3.00 drop to $30.35.
With the current share price at $31.55, it’s reasonable to expect WPL shares to trade back above the $33.00 handle if WTI trades back to $60.00.
Woodside Petroleum
We see price resistance at $14 – $14.30 for Suncorp and we’re watching for the momentum indicators to turn negative.
The trade set-up should provide a short-term “short” trade for ASX50 CFD traders on our Saxo Go platform.
Suncorp
Ramsay Healthcare has been making a “lower high” pattern since selling off from the $75 high in August.
We’re reluctant to look at counter trend trades, however, with the broad thematic of the healthcare space being one of our preferred sectors, we now look to re-enter long positions in RHC.
Over the next 12 months we look for RHC to trade back towards $72 – $75 level on the back of the recent comments from the CEO, where he confirmed the company should deliver 8 – 10% EPS growth.
Ramsay Healthcare
Level 17 Chifley Tower
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Sydney, NSW 2000
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Investor Signals Pty Ltd
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