S&P/ASX 200 Index & US Earnings

Posted on | by Leon Hinde | Leave a Comment on S&P/ASX 200 Index & US Earnings

The S&P/ASX 200 Index finished the week up 0.7%. The best performer was the Materials sector, up 3.8% and worst performer was the Property Trusts sector, down 1.3%. 

As the release of US quarterly earnings gets underway, the market is assessing if the expected 17% average EPS growth rate is being met. The bar is even higher for US banks, where the market is looking for earnings to increase 28% on the same time last year.

If you take out the capital markets business and the one-time events, JP Morgan, Wells Fargo and Citigroup have fallen short of expectations. Rising interest rates, market volatility and tax cuts have not produced stronger results and the banking sector sold-off overnight in new York trade.

Bank of America and Netflix will be key results during Monday’s session.

 

XJO

 

JP Morgan

 

 

 

 

FMG Is Good Value At Current Levels

Posted on | by Todd | Leave a Comment on FMG Is Good Value At Current Levels

Shares of FMG posted their first close above $4.50 since March 27th.

This time last year the share price was close to $6.50, which is about a 30% drop over the last 12 months

We forecast earnings of about 50 cents per share in 2018, a decrease of 34% on the previous 12 months. This puts the current share price at a P/E ratio of 7.6 based on 2018 earnings.

The company currently has a market cap of just over $13 billion and $5.5 billion in debt. The forecast for 2018  EBITDA  is around $6 billion, depending on stable Iron Ore prices.

These are just a sample of the key metrics which suggest FMG shares are undervalued and will offer investors good upside price performance over the medium-term.

Fortescue Metals Group

 

 

 

ALGO Update: Stay short CCL

Posted on | by Todd | Leave a Comment on ALGO Update: Stay short CCL

Our ALGO engine triggered a sell signal for CCL on December 15th at $8.60.

As illustrated in the chart below, the share price has formed a “triple top” formation at the $9.10 level over the last 8-weeks.

In their last report, CCL booked a 10% rise in earnings for its alcohol and coffee business, while the soft drink, juice and energy business fell 6.5%.

We see the first level of support at $8.50, followed by $8.10.

Investors trading on our SAXO Go platform can look to sell CCL with a stop order just above $9.20

Coca-Cola Amatil

 

 

 

IAG – Buy-write Producing 10-12% Cash-Flow

Posted on | by Leon Hinde | Leave a Comment on IAG – Buy-write Producing 10-12% Cash-Flow

The key take-away from the this week’s AGM is that IAG remains confident of reducing its cost base by >A$250 million from A$2.5 billion to A$2.25 billion by 2020.

The company also reaffirmed the outlook for 10% EPS growth over the next 3 years.

IAG provides a solid buy-write opportunity with the stock retracing back from recent highs and now finding support at $7.50.

FY19 profit is forecast to be $1billiWn, EPS $0.45 and DPS $$.36, placing the stock on a forward yield of 4.8%.

 

 

 

Newcrest Firms As Spot Gold Approaches The Top Of The Range

Posted on | by Todd | Leave a Comment on Newcrest Firms As Spot Gold Approaches The Top Of The Range

The price of Spot Gold has been trading in a broad “pennant” formation since early January.

The range of this pennant are bound by the January 25th high of $1365 and the March 19th low of $1307.

We believe that the balance of fundamental and technical analysis supports the idea that the pennant will be resolved to the upside with Gold trading back above $1365.

The share price of NCM has been beaten down about 15% since a tailing dam failure at their Cadia mine in NSW in early March.

With their quarterly production report scheduled to be released on April 26th, we believe the stock has found a solid base in the $19.40/50 area for a move back into the $22.00 handle over the medium-term.

Newcrest Mining

Spot Gold

OZL Firms On Higher Copper Prices

Posted on | by Todd | Leave a Comment on OZL Firms On Higher Copper Prices

Since posting a low of $2.90 per pound on March 26th, the price of US High Grade Copper has risen over 6% and closed at $3.08 in NY Today.

This is good news for shareholders of OZL as the share price has traded back over $9.20 in early trade.

Our ALGO engine triggered a buy signal in OZL on December 12th at $8.60, and the stock is also included in our ASX Top 100 portfolio.

We see a key resistance area in the $9.35 area; once that level is broken, we expect to see solid range extension back into the $10.00 handle.

OZ Minerals