Stay On The Buy Side Of Treasury Wine

Posted on | by Todd

TWE held their AGM last Thursday which was co-located in Hong Kong and Melbourne.

Chief executive ­Michael Clarke said earnings for 2019 would be bolstered by its new distribution model in the US, which was gaining traction with industry players, and its ability to deliver more luxury wine to its consumers.

He also reiterated his guidance for 25% EBITS growth in 2019 and noted that 1Q results were in line with internal plans for every revenue location.

In August, TWE reported a 34% jump in full-year net profit to $360 million as revenue fell by 1.5 per cent to about $2.5 billion.

Despite this upbeat news, TWE share price has been unable to hold above $17.00.

We consider this more a transitory function of the overall re-balancing of the ASX 200 Index, than a specific valuation issue with TWE.

As such, we suggest accumulating shares at current levels with an initial upside target of $19.40 and then $21.60.  Treasury Wine Estates

 

S32 Production Update

Posted on | by Leon Hinde

S32’s 1QFY19 production result was generally better than the market had expected.

However, with forward earnings guidance unchanged, we see further downside for the share price given the weak market backdrop.

Price support is likely to be within the $3.20 to $3.50 range.

South 32

ALGO Update: Go Long Sonic Healthcare

Posted on | by Todd

Our ALGO engine triggered a buy signal for SHL last Friday at $23.70.

This “higher low”pattern is referenced to the intraday low of $22.50 posted on April 4th.

We like the diversified structure of SHL in which no single operation accounts for more than 25% of the company’s overall revenue.

In addition, SHL generates a large percentage of their earnings in both the USA and Europe which will increase, on a net basis, as the AUD trades lower.

We consider SHL a good buy/write strategy as the share price approached the $25.00 level.

Sonic Healthcare

 

IAG – Finding Investor Support

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal in IAG last Thursday.

With the stock trading down to $7.00, a 1-year low for the share price, we now expect buying support to build.

Internal momentum indicators suggest a rebound into the $8.00 range is likely over the medium-term.

Added price support is likely from capital management post-Asian asset sales.

We estimate up to $600 million made up of $300 million in special dividend and $300 millon in share buybacks.

 

Aristocrat Continues To Firm On Higher Earnings Estimates

Posted on | by Todd

Since testing a key support level at $27.00 last Friday, shares of ALL have rallied over 10% to hit a 1-month high of $29.60 in early trade today.

The stock has been supported by suggestions that next month’s full-year profit announcement  is likely to surprise to the upside by as much as 20% in the group’s social gambling business.

At $29.40, ALL is at about 19X estimated FY 2019 earnings. In addition, given ALL’s exposure in the USA, a further fall in the AUD/USD will act as a tailwind going into next year.

ALL is part of our ASX Top 50 Model portfolio and we have an upside target of $40.50 over the medium-term.

Aristocrat

 

Crown Is Building For The Future

Posted on | by Todd

Shares of Crown Resorts have found solid support in the $12.80 to $13.00 area over the last several trading sessions.

With consistent casino and non-casino earnings from their Perth and Melbourne properties, investors are warming up to the potential benefits from CWN’s $2.2 billion project in Sydney; even if it’s 18 months from completion.

At current levels, the stock is trading at 21X FY 2019 earnings for a partially franked yield of 4.5%.

Crown is included in our ASX Top 100 Model Portfolio.

Our near-term price target is just over $14.20, with a longer-term view to $15.75

Crown Resorts

 

 

 

ALGO Buy Signal For CYB

Posted on | by Todd

Our ALGO engine maintains a buy signal in CYB near the $5.20 support area.

This “higher low” pattern is referenced to the intraday low of $5.00 posted on June 1st.

On a percentage basis, the 15.5% drop in CYB  is almost twice as much as the other ASX banking stocks over the last month.

Considering that CYB has most of its mortgage exposure in the UK, has an net interest margin of 220 basis points and is not being targeted by the Royal commission, we believe the stock is oversold.

At $5.20, CYB is trading at 12X FY 2019 earnings. Technical readings suggest a bounce back into the $5.70 area before more significant price resistance at $6.25.

CYB Bank

 

 

 

Add To Tabcorp At Current Levels

Posted on | by Todd

Shares of TAH have slipped about 6% lower over the last 10 trading sessions.

With their AGM scheduled for tomorrow, we believe is worthwhile to recap some of the company’s performance numbers released in August; this was the first report to reflect the TAH/Tatts merger.

The highlights of the report were: EBITDA up 69%, Revenues rose 71%, net profit of $28 million and EPS growth of 1.9 cents a share versus a 2.5 cent loss last year.

We believe the AGM will be a platform for TAH to announce further synergy savings from the merged entity, new product ideas and increasing revenue in the digital gaming sector.

TAH was added to our ASX Top 100 portfolio in February and our ALGO engine triggered a buy signal in early April at $4.22.

We see good value in TAH at current levels with a medium-term target of $5.40.

Tabcorp

 

 

 

 

ALGO UPDATE: Stay Long QANTAS

Posted on | by Todd

Despite widespread downside pressure and increased volatility in the ASX 200 index, shares of QAN have stabilized above the $5.10 support level.

QAN will be releasing its September quarter trading update next Thursday and  holding their AGM next Friday.

We believe that both of these events will be supportive of higher share prices.

QAN has been in our ASX Top 100 model portfolio for over a year and we suggest investors look to add to long positions in the $5.35 to $5.45 range.

Our medium-term target is $6.70 with a longer-term view to $7.35.

QANTAS