Stay Long Tabcorp Into Investor Day

Posted on | by Todd

Shares of Tabcorp are noticeably quiet in front of their Investor Day event tomorrow.

With the share price contained in a 10 cent range for the last week, it’s reasonable to expect investors to react to any forward guidance announcements tomorrow.

TAH shares are up over 6% since posting an intraday low of $4.52 on October 12th.

Our bullish case for the stock is based on continued cost savings from the merged entity and steady growth in the digital gaming sector.

TAH is part of our ASX Top 100 portfolio. We prefer the long side from these levels and look for a near-term upside target of $5.35.

Tabcorp

 

 

GPT – Higher Low In Place

Posted on | by Leon Hinde

GPT has been a high conviction “yield sensitive” stock recommended in the Monday morning “Opportunities in Review” webinar.

As the stock nears our $5.25 target, we recommend investors look to sell the $5.25 covered calls and strip-out the income through the call option and upcoming dividend.

GPT

BXB – Trading Update

Posted on | by Leon Hinde

Brambles reported 1Q FY19, which guided towards flat 1H EBIT growth.

With the stock trading 16 x earnings and 3% yield, we believe there is only limited upside to the share price in the short-term.

The attractive story here is the upcoming spin-off of the plastic pallet pooling business. We expect this to go to a shareholder vote and be finalized early next year.

Buy BXB and sell covered call options to enhance the yield.

Brambles

 

 

Flight Centre – FY19 Guidance

Posted on | by Leon Hinde

At Flight Centre’s AGM yesterday, management provided a weaker than expected trading update.

The update suggested trading conditions were softer than expected driven by weak Australian leisure business.

FY19 underlying profit before tax was guided to be within $390-420m which equates to around 5%.

Whilst the update was below consensus, we believe the stock is close to support and will find buying interest near the current $48 – $49 level.

Flight Centre

HSO Spikes Higher On BGH Takeover Bid

Posted on | by Todd

Shares of HSO are up over 20% in early trade as the company received an unsolicited takeover offer from a group led by BGH Capital.

This is the second takeover bid proposed by BGH, whose first acquisition attempt was rejected by HSO’s board in May.

The details of the new offer are not clear, but it’s suggested to be in the $2.35 per share area.

Interestingly, the GBH consortium includes AustralianSuper, one of HSO’s largest shareholders.

Our ALGO engine triggered a buy signal for HSO at $2.10 on August 16th and we have suggested scaling in to long positions at lower levels.Healthscope.

Newcrest Firms In Front Of Tomorrow’s Sales Data

Posted on | by Todd

Since posting an intraday low of $18.60 on September 6th, shares of NCM have risen over 10% and reached a 2-month high of $20.75 in early trade today.

A combination of firm Gold prices and investors’ interest in holding shares in hard assets has been bullish for the stock.

NCM will release its quarterly sales and revenue numbers tomorrow.

Recall that NCM shares rallied to $21.95 after the release of their Q4 production numbers showed a 15% increase in production to just under 635,000 ounces.

NCM was added to our ASX Top 50 portfolio in July at $20.05.

We suggest adding to long positions in NCM with an initial target of $21.50 followed by $22.40 over the medium-term.

Newcrest Mining

 

 

 

CIMIC – 3Q Earnings Announced Tomorrow

Posted on | by Leon Hinde

CIMIC will report their 3Q18 earnings result tomorrow.

We expect 12% growth based on the same time last year and the company to reaffirm the calendar  year 2018 guidance of underlying NPAT to be in the range of $750 million+.

The company is currently bidding on several major projects within the contract mining and infrastructure construction divisions. Work in hand is currently over $35 billion

We also look for any additional information around the 10% share buy-back program. FY19 dividend of $1.70 per share, places the stock on a  forward yield of 3.6%

We recommend accumulating CIM & Downer EDI.

Cimic

Resmed – Valuation Review

Posted on | by Leon Hinde

Resmed  should continue to deliver 10% EPS growth per year over the next 2 – 3 years.

However, at 27x F19 earnings and 1.5% yield, the stock looks expensive.

Other names within the Healthcare space such as CSL at 32x and COH at 38x FY19 also, look expensive.

With the above in mind, our base case is that the sector trades sideways and investors should add a covered call option to enhance the returns.

Resmed

 

CIMIC – approaching the buy zone

Posted on | by Leon Hinde

CIMIC is growing earnings at 12 – 14% p/a and continues to win new large scale infrastructure projects, helping to support the work in hand pipeline.

The stock has recently retraced from $51 back to $46, although we’re mindful of the price gap in the chart down to $43.50, we see value beginning to emerge.

Our accumulation range is $43 – $46.

Keep Downer EDI on your watch list. $7.00 looks like a low risk entry level.