Gold Miners ETF, GDX is now under Algo Engine buy conditions, following the higher low formation at $29.
Look for the short-term indicators to turn positive and buying support to increase within the $28.50 to $29.50 range.
Our preferred ASX listed gold miner is Evolution Mining
GrainCorp is now added to our watch list following the recent Algo Engine buy signal. We see value near $7.50 and look for buying interest to rebuild following the disappointing half year earnings announcement.
GNC reported an underlying net loss after tax of $48 million for the half year. Net profit after tax for the half year last year was $36 million.
GrainCorp Chief Executive Officer Mark Palmquist says these results reflect a particularly challenging period in grains and oilseeds, including severe drought conditions in eastern Australia and grain trade conditions.
They expect continued demand for Malt products in the 2019 northern hemisphere summer but challenging conditions in eastern Australia to continue in the second half.
Planting for the winter grain crop is well underway in eastern Australia, however it is too early in the season to forecast grain production levels and the potential implications for GrainCorp.
We’ll continue to track GNC and update our readers as we see the short-term indicators rebound.
GPT is under current Algo Engine buy conditions and has been in the ASX 100 model portfolio since October last year.
The recent retracement from $6.32 back to $5.65 has triggered a new entry signal and we draw investors attention to the opportunity.
GPT is growing earnings at 5% per annum and trades on 4.8% dividend yield. Through adding a covered call option, we are able to boost the annualised cash flow to over 10%.
Buy within $5.50 to $5.75 range.
–
S&P/ASX is now trading below the 10 day moving average. Investors should continue to watch the price action and monitor any pick up in selling pressure.
Computershare is under Algo Engine sell conditions and we continue to see downside risks to earnings and consensus valuations. Bond yields are well below the input levels used by analysts 6 months back, when forming the forecast valuations.
With the stock trading 20x earnings on a 2.3% yield, we see little reason to own this one.
Boral has been highlighted on the blog as a “high conviction” recovery play. The stock price has now rallied from $4.40 to $5.00.
Looking through any short term market weakness, we see a second half 2019 price target of $5.50 as achievable.
Macquarie Group reported FY19 earnings today and group revenue was up 19% to $6.25bn and NPAT was up 17% $2.99bn.
MQG is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
We forecast FY20 earnings to increase by 6%, placing the stock on a forward yield of 4.8%.
Coles Group is under Algo Engine sell conditions following the lower high at $12.70.
The group announced their 3Q19 sales growth which came in ahead of market expectations. Food and liquor sales grew at 3.3% in 3Q19, however, management indicated that they expect to see the growth moderate back to 2%, or in line with historical growth rates.
A review of the valuation forecasts show FY20 revenue of $40bn, EBIT $1.34bn, on EPS of $0.68 and DPS of $0.55, placing COL on a forward yield of 4.8%.
We see limited downside risk for the share price and we consider selling at-the -money-call options as an alternative to selling the underlying stock.
A number of REITs announced their 3Q19 operational updates yesterday.
Dexus forecast 5% underlying earnings growth. reaffirmed its FY19 guidance for 5% growth.
Mirvac indicated their FY19 guidance will be in the 3 – 4% growth range with DPS growth at 5%.
Across the sector it is likely residential and retail remain the weak spots, whilst office and industrial will continue to provide strong growth. Softening of the retail sector was evident in GPT’s March quarter business update.
Despite GPT’s exposure to retail, the office exposure along with the groups strategy to expand the footprint in logistics, makes the stock one of our preferred opportunities within the REIT sector.
South32 has been under Algo Engine sell conditions since forming a lower high pattern back in February at $4.00.
Weak alumina and coal prices saw 3Q19 earnings miss analysts forecasts. We now downgrade the earnings outlook by 15% and remain cautious on the prospects of a near term turnaround.
Ongoing declines in spot alumina and thermal cost prices, combined with rising costs, will translate to weaker earnings over the next 2 -3 years.
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453