has now switched to Algo Engine sell conditions and has been removed from our ASX 100 model portfolio. Aristocrat Leisure
Aristocrat delivered 1H20 net profit, (NPATA), of A$368mn which was down 13% on the same time last year. Growth in digital earnings was not enough to offset weak revenue in the Americas.
We’re not willing to look at shorting ALL as we see a normalization of the business conditions by 2022, we’ll revisit this name should we see a “buy on the dip” opportunity later this year.
reported a strong 1H19 result with the North American division the standout. The result also benefited from a lower AUD/USD exchange rate. Normalised profit after tax $422 + 16% in reported terms and +7.7% in constant currency. Up from $361m the same time last year. Aristocrat Leisure
In FY20 we forecast revenue to grow by 8% and EPS growth at a similar level. Based on this, we have ALL on a forward dividend yield of 2.2%.
Risks to the business include increased regulation, competition and slowing
customer demand. We look to buy ALL on the next Algo Engine buy signal.
The company goes ex-dividend $0.22 on the 29th of May.
was highlighted on the blog as a “counter trend” buying opportunity last week at $23. The stock is now trading at $25 and we suggest locking in gains. Aristocrat Leisure
is under Algo sell conditions following the lower high formation at $26. This is a favourite amongst local fund managers, with analyst price targets as high as $40. Aristocrat Leisure
The recent selloff has seen the PE fall from 30x back to a 17x PE. With the share price at $23, buying interest is now building and we may see a counter trend rally extend through to $24.50.
We consider the 2019 recovery rally in the below names, as now largely complete.
The post below is from the 14th of November.
GARP is an acronym which is referenced to “growth at a reasonable price”. This is how we now view ALL, TWE, CAR and SEK.
CAR is one of the “GARP” (growth at a reasonable price), names that we’ve been tracking.
With the stock bouncing off the $11.00 price level, we suggest running a tight stop-loss below the recent “pivot low” and giving the upside momentum a chance to develop.
Within the back drop of market volatility, it is difficult to know how this trade plays out in the short-term. Therefore, we highlight the need to run a stop loss.
ALL & TWE as similar technical opportunities.
Over the last three years,
ALL & TWE have been among the best performing stocks within the ASX100 model portfolio.
Both names now reflect a “higher low” chart formation and Algo Engine buy signals.
TWE’s 20% sell-off post FY18 results provides an attractive entry point. FY19 EPS growth is still likely to be in the range of 15 – 20%. Crown’s trading update was weaker than expected as main gaming floor revenue was down 0.6%.
Non-gaming revenue growth was 3.5%, while VIP turnover growth was up 13%.
Star Entertainment showed domestic revenue growth of +6.7% but VIP growth disappointed with it coming in flat on the prior period. Crown looks like good “value” at $12 and is supported by a current ALGO Engine buy signal. Aristocrat (ALL:ASX) is also looking well supported near the $26 range.
ALL is at about 17.5X estimated FY 2019 earnings.
In addition, given
ALL’s exposure in the USA, a further fall in the AUD/USD will act as a tailwind for earnings going into next year. ALL is part of our ASX Top 50 Model portfolio and we have an upside target of $40.50 over the medium-term.
The share price of
CWN dipped to a 10-month low of $12.25 on Monday.
At the current level of $12.60, the stock is trading at less than 20X FY 2019 earnings for a partially franked yield of 4.5%.
Crown is included in our ASX Top 100 Model Portfolio.
Our near-term price target is just over $14.20, with a longer-term view to $15.75
Since testing a key support level at $27.00 last Friday, shares of
ALL have rallied over 10% to hit a 1-month high of $29.60 in early trade today.
The stock has been supported by suggestions that next month’s full-year profit announcement is likely to surprise to the upside by as much as 20% in the group’s social gambling business.
ALL is at about 19X estimated FY 2019 earnings. In addition, given ALL’s exposure in the USA, a further fall in the AUD/USD will act as a tailwind going into next year. ALL is part of our ASX Top 50 Model portfolio and we have an upside target of $40.50 over the medium-term.