Our ALGO engine triggered a buy signal for Ingham’s Group on December 18th at $3.42.
Now that Red Lea Chicken has been placed into voluntary administration, analysts estimate that ING’s 40% share of the domestic chicken market will grow by 1-2% and add 1.2% to EPS.
Based on those estimates, we see the share price rising into the $4.00 area over the medium-term.
Ingham’s Group
Our ALGO engine triggered a buy signal in Sims Metal Management into the ASX close yesterday at $14.25.
The “lower high” pattern is referenced to the $13.15 low posted in early November last year.
The share price of SGM has dropped more than 13% since announcing the acquisition of UK-based Morley Waste Traders to their existing 10 recycling sites across Europe.
We see solid technical support in the $14.00 area and scope for near-term move back into the $15.60 level.
Sims Metal Management
Medibank has been under selling pressure on fears of rising political risk. The Labour Party appears likely to campaign into the next Federal Election with a promise to limit annual premium rate increases to 2% for two years. This is well below the 4-6% historical trend.
Despite the concern highlighted above, we view Medibank as a buying opportunity, as it approaches an oversold level.
A rally back to $3.00 should provide an opportunity to set covered call options and generate additional premium income to complement the 6.5 cent September dividend.
Medibank Private
US-based, private equity firm Harbour Energy has raised it’s takeover offer to $13.5 billion for oil and gas producer SANTOS.
This is the third offer since last August and pencils out to $6.50 per share.
The bid represents a 30% premium over last Friday’s closing price of $5.07 per share.
STO was added to our ASX Top 100 Model Portfolio at $4.82 on February 12th.
Santos
Star has entered into a private placement with its JV partners, Chow Tai Fook and Far East Consortium to raise $490m at $5.35. The alliance agreement has been entered to build an additional 5 JV towers at the Gold Coast and one in Sydney.
The SGR board has revised the dividend pay-out ratio to a minimum of 70% of normalised EPS. The announcement was also accompanied by a trading update – Normalised group revenue for the March 18 quarter was up 19%.
FY19 revenue of $3 billon, EBIT $440m, EPS $0.33 and DPS $0.20 places SGR on a forward dividend yield of 3.7%.
Star
Our ALGO engine triggered a buy signal for RIO into the ASX close yesterday at $72.70.
The “higher low” structure is referenced to the $68.60 low posted on August 12th.
Analysts have retained their buy rating and $90.00 price target on the mining giant’s shares after it announced the sale of its stake in the Kestrel coal mine for US$2.25 billion.
RIO was added to our ASX top 100 Model portfolio last March at $61.40.
RIO Tinto
Our Algo Engine generated a buy signal yesterday in the SPDR S&P World ex Australia ETF.
The signal was triggered at $21.63 as the stock retraced back to form a “higher low” formation. $20.50 is also a relevant price target from the high back in 2015. Investors wanting to add global portfolio exposure through one simple transaction may consider this ETF.
3 year average annual return is running at around 9%.
If investors wanted to play a US dollar recovery, they may opt for the un- hedged WXOZ ETF.
We suggested buying AMC in a blog posting on March 7th at $14.06.
Since the start of the year, AMC has been trading in a pennant formation with support in the $13.70 area and firm resistance at $14.50.
The share price traded to $14.26 today and we are looking at $14.50 as a price inflection point.
A break higher could extend to $14.80, which would offer and opportunity to sell the $15.00 calls into December.
This would allow investors to collect the September dividend of 29.85 cents, as well as 60 to 70 cents in option premium for the sold calls.
AMCOR
GPT Group is currently in our ASX 50 model portfolio and with price action bouncing off the $4.60 support level, we recommend investors look at a buy-write strategy.
GPT goes ex-div $0.123 on the 29th June.
GPT
While much of the financial media has been pointing to the threat of a trade war as the source of recent market volatility, we have also noticed rising stress in the inter-bank funding market.
As illustrated in the chart below, the LIBOR-OIS spread has spiked from 22 basis points to almost 60 basis points over the last 5 weeks.
The LIBOR-OIS spread reflects the amount of premium one bank requires from another bank to loan them money.
In simple terms, when banks start to question the financial health of other banks, the spread widens.
Rising funding costs are a headwind to global equity markets, which in turn acts to dampen bond yields; especially in the longer end of the curve.
The practical impact of this dynamic has been seen in the recent firming in some of the local interest sensitive names.
At these levels, we prefer the long side of SYD, TCL, SCG and WFD
LIBOR-OIS Spread
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