Crown Resorts – What’s Next?

Posted on | by Leon Hinde

Crown Resorts today acknowledged Wynn Resorts is disengaging with respect to the announced takeover proposal.

We sold at $14.00+ yesterday, following the 20% rally on the open. The stock has retraced 10% and today is trading at $12.80. We again see value in Crown at or near this level.

A cautious approach is to sell covered call options and run the position as an income contributor to portfolios, (10% cash flow), or the more aggressive play will be to hold the stock for the potential of a concrete takeover offer from Wynn or another rival.

Assuming 5% EPS growth into FY20, we now have the stock on a 4.3% forward yield.

 

Crown Resorts – Takeover Offer

Posted on | by Leon Hinde

Crown Resorts have announced a pause in trading of its shares amid media reports of a takeover bid. It is suggested the company has attracted the interest of Wynn Resorts.

Whilst Crown has been our preferred exposure, Star Entertainment will also benefit from the improved sector sentiment.

NOTE: At 10.30am today, CWN  confirmed the takeover offer at $14.75 per share 50% cash and 50% Wynn shares.

 

 

Woodside – Buy Signal

Posted on | by Leon Hinde

{ASX:WPL) is under an Algo Engine buy signal and we consider the stock a suitable buy-write.

Buying the stock and selling a long dated covered call will deliver 10% cash flow on an annualised basis and provide for a moderate level of capital growth.

 

 

Graincorp – Algo Buy Signal

Posted on | by Leon Hinde

Graincorp is now under Algo Engine buy conditions and buying support has developed around $9.00.

The story gets slightly more complicated for investors, following Graincorp  announcing they intend to demerge the global malting business into a separate ASX listing.  This is likely to occur in the second half of 2019.

This will then leave the integrated grains & oils business as a separate ASX listed company.

We believe the standalone malt company will be an attractive investment.

 

NASDAQ – Watch For Sell Activity

Posted on | by Leon Hinde

The NASDAQ Index is now under Algo Engine sell conditions, US March quarter earnings kick off next week and the impact of the blackout period, (meaning company share buy-backs are suspended), needs to be considered in conjunction with the potential for weaker earnings.

Our trigger remains a break in the 10 day moving average, which is currently 1 to 2% lower than the last close price.

Woolworths – Off-Market Buy-Back

Posted on | by Leon Hinde

{ASX:WOW) announced on April 1, 2019, that it will be conducting an off-market buy-back to return up to A$1.7 billion to shareholders.

Completion of the off-market buy-back will be in May with the buy-back price  expected to be announced on May 27.

The stock looks overvalued at 24x earnings and 3.3% yield.

 

 

 

ASX – Earnings Upgrade

Posted on | by Leon Hinde

ASX is among the best performing stocks within our ASX 100 model portfolio. The stock remains under current buy conditions and the earnings have been slightly upgraded, following the release of the March quarter trading data.

The upgrades were driven by stronger than expected ASX 24 derivatives activity. Volumes increased 11% on the same time last year, with a record month in March 2019.

Cash equities turnover was up 9% year-over-year.

At 26x earnings and 3.2% yield, the stock looks expensive but it does offer a relatively safe harbour.

 

 

US Markets – Watch the NASDAQ Index

Posted on | by Leon Hinde

All major equity indices are now showing Algo Engine sell conditions. The NASDAQ has led the charge higher and the FANG stocks in particular, have outperformed.

Technically, we suggest investors overlay the 10 day average on the NASDAQ and build a defensive position once the index trades below the average.