Has The AUD Reached The RBA’s Pain Level?

Posted on | by Todd | Leave a Comment on Has The AUD Reached The RBA’s Pain Level?

At the start of the year, the market consensus was for the Aussie Dollar to fall against the major currency pairs during 2017. So far this year, the AUD/USD has climbed 10% and almost touched .8000 last week.

At 1pm today, RBA chief Philip Lowe will be giving a speech in Sydney. Since many exporters look at .8000 as a pain level, it’s reasonable to expect Mr Lowe to comment about the level of the Aussie.

The strengthening AUD/USD has created a headwind for domestic companies with earnings exposed to the softening USD.

Four companies that we follow which have seen their share prices dampened due to a stronger Aussie are: BXB, CPU, ANN and JHX.

Australian Dollar

Algo Update – BHP & WOW

Posted on | by Leon Hinde | Leave a Comment on Algo Update – BHP & WOW

Recent Algo Engine buy signals in BHP and WOW continue to perform strongly.

An overnight rally in metal and oil prices will support BHP in today’s trading   and investors may wish to consider selling covered calls into November, at or near the $26 strike price.

Chart – BHP

Woolworths reports earnings on the 23rd August and the market will be looking for underlying EPS growth of 8% to support the 22x earnings multiple.

With WOW now trading on forward yield of 3% and a relatively high multiple, we encourage investors to sell $28 Dec call options to boost the annual cash flow return.

Chart – WOW

 

Computershare – Earnings Result 16th Aug

Posted on | by Leon Hinde | Leave a Comment on Computershare – Earnings Result 16th Aug

Computershare reports earnings on the 16th August.

At 20x forward earnings and 2.6% dividend yield, we feel CPU will likely disappoint and deliver earnings below market expectations.

Any bounce in CPU from these levels will provide an opportunity to consider building new short exposure.

Chart – CPU

James Hardie trades at 26x forward earnings with a 2.7% forward yield.

Again, we consider this name expensive and likely to disappoint investors when JHX report earnings on the 8th August.

A rally back towards $21.00 will provide an opportunity to reset short exposure.

Chart – JHXJHX

 

 

Algo Signal Update – GrainCorp

Posted on | by Leon Hinde | Leave a Comment on Algo Signal Update – GrainCorp

As an update to last week’s post on GrainCorp, we again remind readers that GNC is approaching an oversold level.

We expect support will likely develop at or near the current price level.

The trade in GNC is  likely to be a corrective move from oversold conditions.

The stock price is unlikely to develop into a meaningful uptrend.  We recommend a stop loss below the final pivot, or entry point. GNC

$8.50 – $9.00 is buying support with $9.50 is the profit target.

Chart – GNC

 

 

 

Algo Buy Signal – Sonic Healthcare

Posted on | by Leon Hinde | Leave a Comment on Algo Buy Signal – Sonic Healthcare

On 12th July, our Algo Engine triggered a buy signal in Sonic Healthcare, at or near $22.20.

We see this as a level of price support and our base case is that Sonic trades sideways, at or near the current price.

Sonic reports earnings on the 16th of August and we expect underlying EPS growth of 8%, which will support a forward dividend yield of 3.8%.

When combining a covered call option, we’re generating 10 – 12% cash-flow per year.

Chart – SHL

 

 

 

 

Algo Buy Signal – Seek

Posted on | by Leon Hinde | Leave a Comment on Algo Buy Signal – Seek

Our Algo Engine triggered a buy signal in SEK back in mid-June, when the stock was trading at $16.15, since then the price action has rallied to $17.50.

We consider the current price level as full value and investors should consider either taking profit, or selling covered call options.

Seek reports their earnings on the 16th of August and the market is expecting underlying EPS growth of 10 – 15%, delivering NPAT of $192 million.

Chart – SEK

NCM Meets Gold And Copper Output Targets

Posted on | by Todd | Leave a Comment on NCM Meets Gold And Copper Output Targets

Shares of Newcrest have opened  1% higher at $19.80 as their quarterly production report reflected a uptick in production going into the second half of the year.

The company said that its Q4 gold production fell 7.7% from a year ago after the closure of its Cadia mine, but overall output was just enough to meet its full-year target.

Overall production of 551,815 ounces in the quarter helped the gold miner reach an annual output of 2.38 million ounces, which is at the lower end of their 2.35 to 2.60 million ounce forecast.

NCM also posted copper production of  83,900 tons, which is within the guidance of 80,000 to 90,000 for the year.

With spot Gold now trading at one-month high of $1255.00, we expect NCM to move back into the mid-June range of $21.50 to $21.75.

Newcrest