Our Algo Engine generated a buy signal recently in CSR and we recommend investors keep this name on their watch list.
$4.31 is likely to be a point of support as the stock price trades into a value range supported by a 5% dividend yield.
Last week, CSR management reaffirmed the FY19 earnings outlook for flat growth on FY18 numbers.
For this reason, we view the approaching opportunity as a “technical bounce” rather than the beginning of a prolonged uptrend.
CSR
Shares of Telstra have started the new financial year off with a firmer tone rising 3% over the last three days.
Some of the positive sentiment has been driven by the news that TLS has sold 20% of its ventures arm to US private equity firm HarbourVest for $75 million.
The move is part of a broader plan for TLS to become a more technology-focused company and is consistent with the “Telstra2022” strategy announced last week.
HarbourVest has more than $50 billion in assets and the venture fund with TLS is expected to be valued at about $675 million.
After the $500 million loss from the Ooyala fiasco last year, the market may need some convincing that further investment in emerging 5G and next generation businesses will truly add to shareholder value.
It’s reasonable to expect that joining forces with the more experienced HarbourVest validates TLS’s commitment to the venture revenue stream and will see better results.
We believe that at current levels, TLS represents good value for investors with a medium to longer-term investment time horizon, with an initial target of around $3.90.
At $2.71, TLS is trading at a 9.7 PE and is on a 7.6% yield.
Telstra
Following the recent takeover offer for APA at $11 per share, (subject to FIRB review), we see a reasonable risk/reward opportunity to buy both APA and SKI.
A soft backdrop for global bond yields should provide downside protection as investors seek out defensive yield opportunities. Added upside exists in APA if the takeover is given the green light by regulators.
APA Group
Our Algo engine generated a recent buy signal in Downer EDI and we’re encouraged by the fundamentals supporting solid future earnings growth.
The outlook for DOW’s base business is positive, with a favorable
backdrop across virtually all of Downer EDI’s markets including infrastructure, renewables, resources, health & government projects.
FY18 guidance to be achieved with 10%+ eps growth expected in FY19.
Based on FY19 forecasts we anticipate $11.5b in revenue, EBIT $500m and DPS $0.29, placing DOW on a forward yield of 4.1%.
ASX:DOW
Link Administration has attractive long-term fundamentals and is likely to deliver consistent high single digit earnings growth.
At present, the market is failing to look through the shorter-term impacts from changes to recent superannuation legislation. Should broad market weakness force a retest of the $7.00 price range, we’d consider this a good entry level.
Link
Our Algo Engine generated a buy signal in Spark Infrastructure mid last year.
With the price action trading down to $2.30, we now see scope for higher prices in Spark (SKI) as global bond yields move lower on trade tension fears.
Spark
Our Algo Engine recently generated a buy signal in Healthscope and we anticipate a suitable entry price will be within the $2.10 – $2.20 price range.
Healthscope
Shares of Cimic Group have started the week over 4% higher and have reached a 2-month high of $44.75 in early trade.
Investors are reacting to the recent news that CIM was awarded a 4-year, $480 million contract by QCoal to continue mining services operations at QCoal’s Bowen Basin Mines.
Our ALGO engine triggered a buy signal for CIM on June 1st at $40.73 and the stock has been part of our ASX Top 100 portfolio since June of 2016.
From a technical perspective, we see solid support near $42.50 with an initial upside target at $47.50.
Cimic Group
Our Algo Engine generated a recent buy signal in Tabcorp at $4.20 and we again reaffirm our “strong buy” position in the stock.
Last week, the Australian Federal Government passed legislation which will prohibit the use of ‘synthetic lotteries’ like Tabcorp’s main lottery competitor, ‘Lottoland’.
TAH effectively has a monopoly on lottery activity, as the company holds the licence in every state, with the exception of Western Australia, which is state-run.
We feel Tabcorp’s defensive earnings are being undervalued by the market and the August earnings result will be a catalyst to drive the share price higher.
Tabcorp goes ex-div $0.125 on the 11th August.
Tabcorp
Our ALGO engine triggered a buy signal on QAN into yesterday’s ASX close at $6.16.
This “higher low” pattern is referenced to the intraday low of $5.95 posted on February 5th.
A recent broker note from CITI has retained their buy rating on the stock with a $7.90 price target.
Part of CITI’s analysis focused on the airline’s dynamic hedging program, which has reduced the drag on their overall profitability during the recent rise in fuel prices.
QAN was added to our ASX Top 50 Model portfolio in July of 2017 at $5.25.
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