Qantas – Algo Sell Signal
Qantas Airways has been under Algo Engine sell conditions since forming a lower high in February at $6.25. The stock is now trading at $5.25 and we see little reason to change our short-side bias on this one.
Computershare – Algo Engine Sell Signal
Computershare is under Algo Engine sell conditions and has been forming a lower high pattern since topping at $20.50, September last year.
We continue to view the market’s assessment of the future earnings growth picture, as miss-guided. The factors that have lead to the recovery in earnings are transitory and the 20X PE and 2.5% yield, makes CPU too rich for our liking.
Our downside price forecast over the next 12 – 18 months is $15.00.
Carsales.com – Approaching Resistance
Carsales.Com is under Algo Engine sell conditions and with the price approaching $14 we expect selling pressure to build.
The chart below illustrates the range where selling is likely to increase.
Graincorp – Finding Support
GrainCorp is under Algo Engine buy conditions and we highlight the buying interest following the share price finding support at $7.10.
China – is there value?
Following the approximate 10% sell-off within the various ETFs which provide exposure to Asia large cap and more specifically China, we now have a series of Algo Engine buy signals to consider.
The IZZ.AXW iShares China Large Cap and the IAA.AXW iShares Asia 50 are two high quality considerations. If investors are seeking a tilt towards the faster growth tech sector, we suggest adding the Betashares Asia Technology Tigers to your watch list.
Lendlease – Takeover Speculation
Over the past 6 months, we’ve been promoting Lendlease as a high conviction buy-side idea, based on the long-term value the business offers.
The stock price has rallied 7% this month, following The Australian newspaper reporting Japanese group Mitsui may be considering a takeover and breakup of LLC.
BHP – Algo Buy Signal
BHP Group is now under Algo Engine buy conditions following the retracement from $40 in April, back to $36 in today’s session.
Iron Ore prices remain elevated at US$93 per tone and the energy complex looks well supported from global demand and geopolitical issues with Iran.
Investors seeking income should consider adding a BHP Sept call option and stripping out the dividend, plus the call option premium.
BHP goes ex-div $0.89 on the 6th of September.
To learn more about the derivative overlay on BHP, please call our office on 1300 614 002.
WPL & ORG
Within the Energy sector we like Woodside Petroleum and Origin Energy as our preferred exposures.
WPL offers 5% franked dividend yield and when combined with a covered call option, we’re generating 10% cash flow whilst allowing for a moderate level of capital growth.
ORG offers appealing capital growth prospects as the company pays down debt and reinstates a more progressive dividend policy.
Strong oil prices and increasing LNG production numbers are tailwinds that are likely to continue for ORG. Capital expenditure is also tracking lower than guidance and these factors combined are helping to add to group cash generation.
Spark Infrastructure – Algo Buy Signal
Spark Infrastructure is under Algo Engine buy conditions following the higher low formation at $2.20.
Spark Infrastructure has a long history of owning and investing in essential service infrastructure. Their networks deliver electricity to more than 5 million Australian homes and businesses.
This enters our radar and we’ll continue to review the earnings outlook and business fundamentals.
Buy Scentre Group & Sell Call Options
We recommend buying Scentre for a move back towards $3.90.
Once the stock is trading at our target, investors should then add a call option to enhance the income return.
SCG goes ex div $0.11 on the 14th of August.
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