We recommend buying both Downer EDI & CIMIC Group at current levels.
Both of these infrastructure names have pulled back materially from their June highs without any negative changes to their growth prospects.
From a technical perspective, we see medium-term upside targets of $7.50 and $51.50, respectfully.
We recommend buying Medibank Private at current levels.
Since trading down to $2.62 on Monday, the stock has risen 6% and reached $2.79 in early trade today.
The internal momentum indicators are now pointing to resistance near $3.10.
Medibank Private
Our ALGO engine triggered a buy signal for S32 last Friday at $3.51.
This “higher low” patterned is referenced to the intraday low of $3.35 posted on September 5th.
After a solid quarterly report two weeks ago, the share price spiked to a new all-time high of $4.28.
Since then, the share price has dropped over 17%, which is what triggered the ALGO signal last week.
S32 is a diversified miner and exports a range of minerals from Alumina to Manganese.
As such, we believe that S32 shares will find investor support above $3.00 for another run at the $4.00 handle over the medium-term.
S32
CSR reports its 1HFY19 earnings on Friday and the market is looking for EBIT of $170 – $180 million for the 6 month period.
Boral, James Hardie and CSR have all been under pressure from short sellers and we are expecting to see some reversal of this trade.
The building stocks, in general, are looking oversold.
CSR
Ramsay Healthcare remains in a Algo Engine “sell” condition, however, after the share price correction from $85 to $52, we now see value beginning to emerge.
Shareholders in Swedish hospitals group Capio have given the approval to RHC’s 51% owned French subsidiary A$1.3bn takeover offer, to proceed.
With all conditions now satisfied, the deal’s expected settlement will be early next month.
Watch for RHC to turn positive and generate an Algo Engine buy signal in the coming months.
RHC
Our Algo Engine triggered a buy signal for IAG at $6.95.
This “higher low” pattern is referenced to the $6.56 low posted last October.
The stock is a current holding in our ASX 50 and ASX100 model portfolios.
With the share price trading sub $7.00 we consider value is now on offer.
IAG recently announced it had sold its operations in Thailand, Indonesia and Vietnam. Following this, the company indicated they would return $592 million of capital to shareholders.
In FY19, IAG will pay $0.195 capital return and a $0.055 special dividend.
Sonic Healthcare is looking oversold and we believe buying support will build within the $21.50 – $22.50 price range.
SHL has a large percentage of their diagnostic equipment revenue based in US Dollars. As such, the company will benefit from the lower Aussie Dollar.
CSL is one of the best performing stocks within the ASX20, ASX50 and ASX100 model portfolios.
Since being added in May 2015 the share price is up 113% including dividends.
The recent retracement in the share price provides another opportunity for investors to add CSL to their portfolios.
CSL
RMD has rallied from $13.75 to $14.75 following last weeks reported strong 1Q19 result, which included EBIT +28% on the same time last year.
The company also delivered robust top-line growth, which came in ahead of market expectations. Gross margins held at 58+%.
We anticipate EPS growing from US$3.70 in FY19 to US$4.50 in FY21 and revenue growing from US$2.9 billion to US$3.5 billion over the same period.
Resmed
Despite the turmoil on Wall Street this week, we’ve seen home-builders, autos and a handful of other companies deliver positive returns of 5%+.
Money is rotating out of technology, (down 12% this month) and into the over-sold sectors and stocks from the past 9 months.
So where is the bottom in the XJO?
As illustrated in the chart below, the 50% retracement level in the XJO is approximately 5550 points.
Whilst there’s no certainty that buying support will build at this level, history suggests that investors should be watching the short-term momentum indicators closely for an inflection point.
In Monday Morning’s “Opportunities in Review” webinar, we’ll identify the corresponding price levels within the ASX 100’s “biggest and best” companies.
The NASDAQ and Dow Jones Index have further downside before finding their respective 50% retracement levels.
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