Last week we suggested a buy level for ASX Ltd near $58.00.
With yesterday’s low intraday print at $57.80, that downside buy target has been reached.
Also, with the share price sliding over 15% lower during the last month, internal momentum indicators are now oversold and a reversion higher looks likely.
At $58.00, the stock is on a forward yield of about 4%. We see the first level of resistance near $62.60 and up to $64.00 over the longer-term.
ASX Limited
Since posting an intraday low of $2.60 on June 29th, shares of TLS have rebounded smartly and reached $3.40 in late August.
Last week’s market volatility has dampened investors interest in the stock over the last few days but, at $3.10, the share price is still 20% above the June low.
Tomorrow’s AGM will be a big test for bullish investors.
In focus will be the Telco giant’s “quantitative based” executive salary and bonus plan, as well as earnings updates across the company’s spectrum.
Given TLS’s target of 45% digital sales growth by 2021, we like the long side of the stock with a near-term target of $3.60.
Telstra
Last week’s extreme volatility in global equity markets has been a net positive for the local gold mining names.
After trading as low as $1060.00 in mid-August, Spot Gold reached a 2-month high at $1226.00 last Thursday.
As illustrated on the chart below, the yellow metal is still down more than 10% over the last 6-months.
However, with last week’s change in the overall risk dynamic of equities, investors may increase their holdings in Gold as a hedge against market uncertainty.
Combined with a weaker Aussie Dollar, we see stable gold prices lifting the shares of the local miners.
Our preferred names in the Gold sector are: NCM, SBM, SAR and EVN.
Spot Gold
Newcrest Mining
Santa Barbara
Saracen
Evolution Mining
Our Algo Engine has triggered buy signals in Sonic Healthcare, Resmed and CSL over the past few trading sessions.
RMD has experienced its first sell-off since rallying from $10 last year to $16 only a few weeks ago.
The ALGO engine is now flagging the new “higher low” at $14 and we suggest buying a 1/2 size allocation here and then waiting to see if we get another ALGO signal to add to the position.
CSL provides good long-term fundamentals. The PE is still expensive, however, 10 – 20% EPS growth is attractive! Accumulate at $180
SHL looks to be good value at $23. We see resistance is $25, so look to sell call options to enhance the return.
Chart: RMD
Chart: CSL
Chart: SHL
Our Algo Engine generated a buy signal in BXB last week and we highlight the price gap in the chart down to $10.06.
We’ve upgraded BXB to accumulate and our buy target range is $10 – $10.40
The potential spin-off of the plastic pallet pooling business will unlock value for shareholders and provides the catalyst for us to have a favorable medium term outlook on the business, along with modest earnings growth showing up in the latest 6-month result.
Brambles
Wesfarmers at $46 looks attractive heading into the spin-off of Coles later next month.
Growth in the separated businesses will be limited, so once the spin-off is completed, investors can sell covered call options and strip-out the returns from the dividends and option premium.
Note: WES released its scheme booklet as part of the Coles demerger. The vote is scheduled for November 15th with Coles to commence trading on November 21st.
Wesfarmers
Overshadowed by the general market weakness, FMG has announced a $500 million on-market share buy back plan earlier this week.
Once completed it will be 4 – 5% earnings accretive by 2020.
Shares in FMG have risen over 6% since the announcement and we see the next significant price resistance level near the July 25th high at $4.60
Fortescue Metals Group
Our ALGO engine triggered a buy signal for BXB into yesterday’s ASX close at $10.39.
This “higher low”pattern is referenced to the intraday low of $9.55 posted on August 8th.
As illustrated in the chart below, BXB has filled the price gap dating back to mid-August, which will provide good support down the the $10.00 area.
We have an estimated upside price target near $12.75 over the medium-term.
Brambles
Our ALGO engine has triggered another buy signal for SUN into yesterday’s ASX close at $13.68.
SUN has been a popular short CFD position on our SAXO Go trading platform since trading at $15.50 two months ago.
We now suggest that investors holding short SUN positions buy them back to close the trade.
After our first ALGO signal on October 2nd, we suggested that SUN would be a reasonable buy/write strategy near the $13.60 support line.
Ongoing deleveraging in the domestic market may challenge the $13.60 price point and we will update SUN in a future posting.
Suncorp
Our ALGO engine triggered an initial buy signal for TWE on September 20th at $17.45. Another buy signal was generated into yesterday’s close at $17.15.
The share price has open sharply lower today and has reached a 4-month low of $16.40 in early trade.
We see the recent price action as technically oversold and see good upside potential to the $20.00 area over the medium-term.
It’s worth noting that TWE posted a 33% increase in NPAT in its last report, and has given guidance of 20% growth in volume and a 12% increase in sales for calendar 2018.
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