Origin Energy – The “Higher Low” Pattern Continues

Posted on | by Leon Hinde

The uptrend in the Origin share price is well established and the stock now trades near full value.

We continue our buy-side interest, although we recognize a period of consolidation over the next 6 months is likely.

At the upcoming earnings result, we’ll be looking for commentary from the company on reinstating dividends and progress on the debt reduction program.

Origin is a recommended buy-write strategy within the ASX Top 50 model portfolio.

Consensus earnings forecasts are looking for 23% EPS growth supported by higher energy prices and ramp up of LNG revenue.

 

Woolworths Investor Update

Posted on | by Leon Hinde

Whilst the grocery industry’s profitability is improving, (as the industry becomes more rational), we’re cautious on Woolworths’ share price due to valuation concerns.

Industry analysis shows Woolworths sales momentum is slowing. With the stock now trading 23 x consensus FY19 earnings, on a forward yield of 3.3%, there seems little margin for disappointment.

We continue to track Woolworths for a new “higher low” formation, at which point the stock will be added into the ASX 50 model at a discount to the current trading range.

 

 

ALGO Buy Signal For Sydney Airport

Posted on | by Todd

Our ALGO engine triggered a buy signal for Sydney Airport into yesterday’s ASX close at $7.05.

The “higher low” chart formation is referenced to the $6.90 intra-day low posted on May 17th.

SYD has now been added to our ASX Top 50 Model portfolio.

As a medium-term strategy for investors, we are looking to buy SYD shares at current levels and sell the $7.25 Calls into March.

The option is current priced at 30 cents and SYD will go ex-dividend for 18 cents in late December. As such, this Buy/Write strategy would add 48 cents of value into client portfolios.

Sydney Airport

 

Algo Update – Buy OZ Minerals

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in OZ Minerals, with the stock making a higher low at $8.80.

OZ Minerals key asset is a copper mine at Prominent Hill in South Australia. Further expansion in nearby mine at Carrapateena will start in late 2019.

FY18 EBITDA will likely be around $550m and the stock trades on a forward yield of 2%.

We consider OZL a high risk opportunity and encourage investors to apply a stop loss on a break below $8.70.

Local Oil Names Drop Sharply After WTI Spikes Lower

Posted on | by Todd

Shares of ASX oil names are under pressure in early trade as West Texas Intermediate Crude Oil (WTI) prices dropped over  4% overnight.

WTI prices fell by close to $4.00 per barrel to $70.40 as a confluence of bearish news hit the market.

Increased trade friction between the US and China pushed WTI lower in Asian tarde, while news that Liyba and Saudi Arabia have increased production by a combined 800,000 barrels per day pushed the market through key support levels.

As illustrated in the chart below, WTI has rallied more than $10.00 over the last 5 weeks, which now places initial support $3.00 lower near $67.00.

Similarly, local oil names, OSH, STO, WPL and ORG have rallied over the last month and appear to have more downside price potential over the near-term.

OSH will announce their quarterly production report next Tuesday and STO and WPL will release their reports next Thursday.

We have traded both sides of these names over the last 12 months and will update with specific entry levels near lower technical support areas over the medium-term.

WTI Crude Oil

Origin Energy

Oil Search

Santos

 

Woodside Petroleum

Buy CIMIC Group

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in CIMIC and we’re encouraged by the buying support which developed around the $40.50 level.

We continue to have a favorable outlook on the fundamental earnings backdrop for CIMIC and we expect next Thursday’s earnings announcement to further support the share price.

CIMIC goes ex-div $0.60 on the 12th September.

ORG Slips Lower In Front Of FY18 Report

Posted on | by Todd

On May 30th, ORG was added to the ASX Top 20 index to replace the dissolved  WFD entity.

Since many Super funds and managed equity firms have a mandate to hold a percentage of listed index shares, we expected ORG to get a boost from the listing.

Since then, the share price has risen by over 8% and posted a 3-year high at $10.27 on Monday.

ORG will release its Quarterly report on July 31st and it looks like the share price could slip lower in front of that announcement.

With the expectations of FY18 NPAT rising by up to 2.6%, we see scope for the stock to hold the $9.20 support level and reach the $10.60 price range after the quarterly report.

Origin Energy

 

 

 

S32 – Buy & add a covered call option

Posted on | by Leon Hinde

Our Algo Engine triggered a buy signal in S32 recently at $3.60. With the stock creating a new “higher low” formation, it has now been added into the  ASX Top 50 model.

S32 goes ex-dividend for 8 cents on the 14th September.   Adding a November $3.80 call option will generate an additional 20 cents of income per share.

South 32

ALGO Update: AGL Continues To Drift Lower

Posted on | by Todd

Our ALGO engine triggered a sell signal for AGL on May 2nd at $22.50.

At the time, we suggested selling  $23.00 call options into September, so investors would receive increased cash flow as well as the 54 cent dividend on August 23rd.

Performance reports from both the Loy Yang A and Bayswater facilities have failed to generate strong buying interest and we remain neutral on the stock.

Daily charts suggest the next level of support for AGL is near $21.35.

AGL