TAH reports their 1H19 result Wed 13 Feb. With stock now under Algo Engine sell conditions, we’ve taken a more cautious positioning ahead of the earnings release.
The stock looks fair value at 12x FY19 and 11x FY20 earnings. FY20 EPS growth of 8% places TAH on a forward yield of 4.6%
FY20 revenue $5.5bn and EBITDA $1.14mn.
Technical resistance between $4.70 and $4.90.
Coles has under invested in the supply chain and online platform vs Woolworths and therefore, investors need to be prepared for lower returns as Coles steps up capital expenditure over the coming years.
If we assume 3 – 5% EPS growth, (half that of WOW), Coles will offer a 5.4% dividend yield into FY20, based on earnings per share of $0.80
Coles trades on 18x FY19 earnings and with little upside to the share price, we recommend investors add a covered call to enhance the income return.
We consider the 2019 recovery rally in the below names, as now largely complete.
The post below is from the 14th of November.
GARP is an acronym which is referenced to “growth at a reasonable price”.
This is how we now view ALL, TWE, CAR and SEK.
Downer EDI has now moved into our “sell” target range of $7.20 to $7.50. After buying DOW at lower levels we recommend investors look to lock-in the gains.
S32 reported their Dec quarter production numbers which came in above market consensus. The strong numbers increase the likelihood of capital return to shareholders, later this year.
We have S32 trading on 5% forward yield with relatively flat EPS growth.
We note the current Algo Engine sell signals across most resource names, (excluding the energy complex).
Carsales.com has bounced from the $11 support level and is now trading at $11.95.
Carsales now has businesses in Mexico, Chile, Argentina, Brazil and South Korea and international business contributes 20 per cent of the company’s revenue.
CAR goes ex-div $0.205 on the 22nd of March.
We expect the upcoming earnings release to show 8 – 10% EPS growth, which will support the 4.5% dividend yield.
The XJO is the first of the major global equity indices to form a lower high formation and display an Algo engine “sell signal”.
We suggest investors stay alert and watch the short term momentum indicators for a rollover.
Healthscope has been one of our “high conviction” buy ideas.
Brookfield Capital Partners are finalising due diligence and we expect to see their offer formalised in the coming weeks.
The price gap is now closing, (all cash offer $2.44), as HSO trades at $2.40 today.
A very mild word of caution… US equities have rebounded from the December sell-off and we’re now approaching the 50% retracement mark.
As US earnings get underway for the Dec quarter, we’ve seen bank earnings in-line with consensus. Towards the end of next week, we’ll begin to see large multinational industrial companies report. It seems plausible, that markets could see some level of resistance begin to build.
The graph below shows the 2 year history of the S&P500.
TWE reiterated its forecast for 25% EBIT growth in FY19. This is in-line with market consensus and is positive for the share price.
TWE is likely to consolidate within the $14.50 to $15.50 price range. At the upper end of the range, we suggest investors look to add a “covered call”.
Example – April $15.50 call is collecting 55 cents per share. TWE also goes ex- div 15 cents on the 7th of March.
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