RIO – Entering Buy Zone
Rio Tinto is now showing an Algo Engine buy signal and has been added into our ASX 100 model portfolio.
We see value emerging and consider the $82 – $87 price range as a good entry-level.
REA – Rallies 5.5%
REA Group rallied 5.5% on Friday following a better than expected earnings result. Our Algo Engine triggered a buy signal Thursday after 3.30pm going into the market close.
The chart below shows the entry signal, along with the $87 support level where buying interest began to accelerate.
AGL – Income Generation
AGL Energy is a under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
AGL announced FY19 underlying NPAT of $1,040m and lowered FY20 guidance to be A$780-860m. The forecast is below already adjusted market estimates and we’ve seen the share price trade lower as a result.
With the stock at $19 there is value supported by a 5% dividend yield. This trade is an example where investors should look to add a covered call option to enhance the yield to 10% per annum.
For more information on the option strategy, please call our office on 1300 614 002.
CBA Earnings
Commonwealth Bank of has announced FY19 cash earnings of $8,5bn, slightly below consensus estimates. The full-year dividend of $4.30 was in line with estimates and places the stock on a 5.1% yield.
Weak revenues were a clear issue with and FY20 headwinds on both revenues and costs will see downside pressure build for the CBA share price.
Suncorp – Special Dividend
Suncorp Group FY19 cash earnings of A$1.15bn are mostly inline with estimates.
The insurance margins are ahead of forecasts and the positive surprise that has lifted the share price is the announcement of the $0.44 final dividend plus $0.39 capital return.
The capital return of $500m is expected on the 24th of October subject to approval at the AGM.
Bendigo Bank – Reports Earnings on Monday
Bendigo and Adelaide Bank remains under Algo Engine sell conditions. The company reports their FY19 earnings on Monday 12th August and we expect a soft result, along with a cautious outlook.
Bendigo Bank and Computershare have been our two “high conviction” short trades. We’ve now covered Computershare but retain our short BEN positioning.
Wesfarmers – Downside Risks
Wesfarmers remains under Algo Engine sell conditions and we’ll review with interest, the upcoming earnings result on the 27th of August.
We expect earnings to be flat on the same time last year, once adjusted for the demerger of Coles. Bunnings and Officeworks will provide high single-digit growth and the department store sales are likely to remain weak.
In a soft market, we may see a discounted entry-level into Wesfarmers, near the $35 price range. Remain patient!
Iluka Resources – Approaching Value
Iluka Resources is now under Algo Engine buy conditions and we have identified the $8.00 – $8.50 price range as a likely area of support.
Watch the short-term indicators for a turn higher.
Oil Search and Woodside – Buying Opportunities Approach
Oil Search has released an announcement stating that the PNG Cabinet has
agreed in principle, to stand behind the LNG gas agreement.
We view this as a positive and suggest that investors monitor the short-term indicators in OSH for an approaching turning point.
Woodside remains our preferred exposure within the energy names. We highlight yesterday’s Algo Engine buy signal in WPL and again, suggest investors watch the short-term indicators in WPL for a turn higher.
GPT – High Conviction “BUY”
GPT is a high conviction buy opportunity which we’ve been highlighting on the blog.
Buying support has been steadily building from the recent $6.10 low and we’re now seeing the short-term indicators trending higher.
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453