We continue to see Amcor as a solid contributor to portfolio returns, especially when complimented with a slightly out-of-the-money call option into November or December.
A combination of the dividend and call option premium produces 10 – 12% annualised cash-flow.
FY18 forecast revenue US$9.6b, EBITDA US$1.5b, Net Profit US$790m, EPS US$0.66 and DPS US$0.49 places the stock on a forward yield of 4%.
Buy on any marginal price retracement.
The ALGO Engine triggered a buy signal for CYB at $4.55 at the ASX on Tuesday.
The stock has recovered nicely from 4.6% plunge in mid-May after posting weaker-than-expected 1H 2017 results.
With underlying profit guidance still in the GBP 123 million area, we’re willing hold the stock with a stop just below $4.50.
CYB
Spot gold rose to its highest levels since November near $1,295 per ounce on Wednesday, good for a 13% gain so far in 2017.
In so doing, Gold broke a technical downtrend that has been in place since the September 2011 peak of $1,900 per ounce.
The support in the yellow metal may be evidence of market fear rather than reflationary exuberance. The Chinese Gold and Silver Society Exchange expects 2017 mainland gold imports to increase by 50% from the prior year, amidst increased safe haven demand.
Daily chart analysis points to the next resistance level near the September highs of $1,322.
We continue to accumulate shares and call options on NCM. We also suggest shares in EVN and the BetaShare Gold ETF with the symbol QAU.
On the 30th of May we looked at the MVB Veneck Vectors Banking ETF and identified the 50% retracement target to be $26.00. Yesterday, the MVB traded at a low of $26.56.
The 50% retracement of the prior peak -to-trough does not guarantee price support. However, more often than not, buyers will step back in at or near this point.
The conundrum facing local ASX investors is the dislocation between US equities and Australian equities. As such, “buy on the dip” domestic investors will need to remain cautious of the extended US equity valuations.
Within a back drop of equity market volatility, Telstra and Woolworths look like a safe harbour for client portfolios.
We see 5 – 8% upside for capital gain plus upcoming dividends in Aug/Sep.
Regular readers will recall that we’ve had a bearish bias on JHX since it broke the $22.50 level in the early part of May.
At that time, the stock was trading at 27 times earnings on a 2.2% annual yield
A weaker US house construction market combined with a general contraction in US retail sales has kept shares of JHX offered over the last several weeks.
We maintain our downside target of $18.00 per share over the medium-term.
James Hardie
The XJO chart below shows the index breaking-down after finding selling pressure at the recent lower high formation on the 2nd of June.
Bendigo and Adelaide Bank (BEN) shares are down a further 2.7 % after losing a whopping 4.4 % yesterday.
In addition to general weakness in the banking sector, shares of BEN are feeling the fallout from alleged accounting discrepancies from their reverse mortgage division, Home Safe.
From a technical perspective, the next significant level of support will be found around the August 8th lows of $9.75.
We would urge caution to investors considering buying BEN above the $10.00 handle.
Bendigo and Adelaide Bank
Back on February 15th, TWE announced that their first half net profit doubled to $136 million. Since then, the share price has traded from $11.20 to an all-time high of $13.63 yesterday.
We suggest taking profits in this price area or writing at-the-money covered calls to enhance the portfolio returns.
There’s no question that TWE has been a well-managed, success story in the beverage space and we’ll follow the ALGO engine to buy back in at lower levels.
Treasury Wine Estates
On May 6th, we posted a report on Gold which suggested the yellow metal was holding support levels at $1220.00 and had a medium-term target of $1260.00. At this time, NCM was trading at $20.10
Gold traded as high as $1281 in early Asian trade today and NCM is finally joining the rally. The stock has reached a two-week high of $21.78 and internal momentum indicators are looking constructive for a move higher.
We’re still expecting higher prices in both, with the next resistance level for gold at $1293.00, and the May 18th high of $22.20 for NCM.
Newcrest Mining
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Sydney, NSW 2000
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Investor Signals Pty Ltd
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