S&P/ASX 200 finished down 1.2%.
The S&P/ASX 200 Index finished the week down 1.2%.
The best performer was the Information Technology sector, up 1.9% and the worst performer was the Energy sector, down 2.1%.
Buy Signal – Westpac
Our Algo Engine generated a buy signal in Westpac yesterday, following the recent price retracement from $33.65 to $31.61.
We see limited earnings growth for the banks and recommend investors overlay an out-of-the-money call option to enhance the cash flow.
Buy Signal – Woodside Petroleum
The current price retracement in WPL to $31.00 provides a low risk entry point.
WPL is a current holding in the ASX 20 and ASX 50 model portfolios.
Merger of TABCORP and Tatts Group.
After a year of negotiations and due diligence, the Australian Competition Tribunal (ACT) has approved the $11 billion merger of TABCORP and Tatts Group.
Despite an objection by the ACCC, the ACT granted the merger and will announce the full details of their decision on November 22nd.
Tatts Group shareholders will vote on the merger on November 30th, which is expected to just be a formality.
Both shares have been placed in a trading halt this morning.
After trading as low as $3.90 on August 14th, shares of TAH have been moving steadily higher as the prospects of the merger approval have increased. The synergies of the merger could see TAH shares rally into the $5.60 area.
Algo Update – Banks
CBA and SUN have Algo Engine sell signals suggesting both names are currently overbought.
ANZ, NAB & WBC have buy signals. The most recent signal in this group has been yesterday’s buy signal on WBC. Following this the stock has now been added to the model portfolio.
The graph below shows the recent price action for the MVB (Vaneck Vectors Bank ETF).
Algo Buy Signal – IFL
Our Algo Engine triggered a buy signal in IFL on the 1st Nov and we’ve added this to our model portfolio with a stop loss below $10.00
Ramsay Rallies After AGM Statement
Shares of Ramsay Health Care have jumped over 3.5% to $67.25 in early trade after the release of its AGM statement.
According to the release, management reaffirmed that it expects its core earnings per share to grow between 8% and 10% for FY 2018.
Based on the market reaction, investors may have been expecting the company to downgrade its guidance considering that private hospital cover has dropped to it lowest level in five years.
For a high capitalization stock, RHC trades on high volatility and wide trading ranges.
The “lower high” pattern is still in place with key resistance in the $68.30 area and support near the September lows of $61.20.
Concensus EPS for FY18 $2.84 v $2.35 for FY17
Algo Update – Dulux Group
Dulux Group reported NPAT up 10% to $142m. FY18 outlook is for 3 – 5 % growth.
We view DLX as full value with the stock now trading 20%+ higher than the Algo Engine buy signal triggered on the 27th July at $6.60.
Amcor – Looking to Acquire Guala Closures Group
Amcor has been shortlisted to acquire the global leader in closures. Amcor identified closures as a new strategic segment at its investor sessions in June 2017.
If regulators approve the deal, Amcor may look to issue new equity.
We continue to view Amcor as a core holding and advise selling call options to enhance the return.
AMC trades on a forward yield of 4%.
Santos Takeover Bid 21% Premium
A consortium of energy investors has made an all-cash takeover offer for Santos worth A$11 billion.
Indicative pricing for the bid was expected to be around A$5.30 per share, a 21% premium to Wednesday’s closing price.
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