Origin Increases Beetaloo JV

Posted on | by Leon Hinde | Leave a Comment on Origin Increases Beetaloo JV

ORIGIN INCREASES INTEREST IN PROSPECTIVE BEETALOO JOINT VENTURE TO 70%

Origin Energy Limited (Origin) today announced it had increased to 70%  its share in the Beetaloo Joint Venture after acquiring Sasol Petroleum Australia Limited’s (Sasol)  35% share.

Origin CEO, Frank Calabria said, “Having recently announced the discovery of a material shale gas resource in the Beetaloo Basin, Origin has seized the opportunity to increase its interest in the Beetaloo Joint Venture by acquiring Sasol’s 35 per cent share.

Our Algo Engine triggered a buy signal in early March at or near $6.25. We remain long the stock and see upside potential to $8.00.

Chart – ORG

 

 

Has Gold Found A Bottom?

Posted on | by Todd | Leave a Comment on Has Gold Found A Bottom?

The Spot Gold price hit a high of $1290.00 on April 17th. Over the last two weeks, the price has dropped over 5% to close just over $1227.00 in late NY trade.

During the same time, the share price of Newcrest Mining has dropped over 20% from $25.30 to $20.10 at Friday’s ASX close.

The closure of the Cadia mine has had a multiplying effect on the share price; which was already feeling the pressure of lower spot gold prices.

The daily chart patterns in both Gold and Newcrest are showing technically oversold conditions. At current prices, we consider both assets good value for a medium-term reversion trade to $1260 and $22.75, respectfully.  Newcrest

Telstra Higher on ACCC Ruling

Posted on | by Todd | Leave a Comment on Telstra Higher on ACCC Ruling

Telstra shares got a boost today as the ACCC decided against letting rival Telcos roam their regional mobile network at a government fixed price.

Some analysts have estimated that mobile communications contributes about 45% of earnings, or $4.2 billion, in 2017/18. Telstra shares have jump by over 4% to reach $4.45 in early trade.

On April 20th, we wrote a blog piece about how TLS at $4.00 per share represented close to an 8% yield on their 15.5 cent dividend. We see value in the stock up to $4.50 keeping the forward yield in the 7.00% area.

Scentre Group – Update

Posted on | by Leon Hinde | Leave a Comment on Scentre Group – Update

Scentre Group (ASX: SCG) today announced its first quarter update for the three months to 31 March 2017. The Group’s operations continue to perform strongly with developments progressing well and comparable speciality sales up 2.4% for the 12 months to 31 March 2017

The Group maintains its guidance for full year growth in funds from operations (FFO) of approximately 4.25%. The distribution guidance of 21.73 cents per security is also maintained.

We like SCG as an income contributor to client portfolios. When complimented with a tight covered call, we’re delivering 10 – 12% annualised cash flow and allowing for moderate capital growth.

Chart – SCG

 

 

NAB Posts Mixed Results

Posted on | by Todd | Leave a Comment on NAB Posts Mixed Results

NAB announced a 2.3% increase in its H1 cash profit to $3.29 billion, which was largely in line with the street’s expectations, but much better than the $1.74 billion loss for the March 2016 half-year result.

While cash earnings grew, net interest margin fell 11 basis points to 1.82%. Charges for bad debts were up 5.1% to $394 million.

The bank maintained its interim dividend at 99 cents per share, fully franked.

Shares of NAB raced to a high of $33.80 at the open but have now settled back into the low $33.00 handle. Our near-term target is around the January lows of $30.50.

 

Facebook Falls On Lower Ad Revenue Growth

Posted on | by Todd | Leave a Comment on Facebook Falls On Lower Ad Revenue Growth

Shares of Facebook are down 2.4% in aftermarket trade to $148.00 after the social media giant released positive earnings, but fell short on expectations of future advertising revenue growth.

The company reported earnings of $1.04 per share on $8.03 billion in revenue versus 60 cents per share on $5.38 billion in revenue in the same period last year.

However, CFO David Wehner repeated his comments from last quarter that advertising revenue would come down “meaningfully”, while payments and other fees revenue fell 3% to $175 million on a year-on-year basis.

Considering the stock has gained over 20% since the beginning of the year, a move back into the $135.00 handle looks like a reasonable downside target.

Facebook

Crude Oil Dips Below $48.00

Posted on | by Todd | Leave a Comment on Crude Oil Dips Below $48.00

West Texas Intermediate Crude Oil prices dropped below $48.00 for the first time in over a month as rising output in the USA, Canada and Libya have more than offset the production cuts agreed to by OPEC members last November.

At one point in the NY session Crude prices were over 3% lower to $47.40 before weekly US inventory data lifted the market back over $47.90.

we have been following the BetaShare Oil ETF called OOO. It has traded in a wide range between $17.50 and $13.80 this year as crude prices have fluctuated.

Apple Shares Drop On Weaker Q3 Guidance

Posted on | by Todd | Leave a Comment on Apple Shares Drop On Weaker Q3 Guidance

Shares  of Apple are trading 1.8% lower in aftermarket trade after a mixed report which beat earnings targets, but fell short on earnings and sales guidance.

The company announced an adjusted EPS of $2.10 versus expectations of $2.02 per share.

However, the revenue number of $52.9 billion was less than the street’s expectation of $53.02. Further, revenue guidance for Q3 has been revised down from $45.6 billion to $43.5 billion.

In addition, gross margins for Q3 are also pointing lower to 37.5% from 38.5%.

Taking into account the 20% rally the stock has seen in calendar 2017 from $118.00 to $147.00, a pullback into the $138.00 handle is a reasonable target.

Woolworths – 3Q17 Earnings

Posted on | by Leon Hinde | Leave a Comment on Woolworths – 3Q17 Earnings

WOW has reported very strong Aust Food sales for the 3Q17.

If we assume FY18 revenue of $57b, EBITDA $3.5b, Net Profit $1.55b and dividends increasing from $0.70 in FY17 to $0.80 cents in FY18, it places WOW on a forward yield of 3%.

Based on the above metric, we think WOW is now fully valued and investors should add a covered call above the market to enhance the return.

Chart – WOW