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.
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.
We consider ALL & TWE as similar technical opportunities.
Carsales.com
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.
At $27.00, 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.
At $29.40, 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.
Aristocrat
Lendlease, ASX, CSL and Aristocrat are names that we covered in Monday’s Opportunities in Review webinar.
Again, we draw your attention to these high quality businesses that have seen a recent correction in their share price.
We believe these names are close to finding support and should be the focus of establishing entry conditions. Watch the short-term momentum indicators for a reversal higher.
Click below to watch the short two minute video
Our ALGO engine reflected a buy signal for ALL on September 14th at $28.90.
The share price is near the same level in early trade today.
However, with the recent acquisitions of Big Fish Games and Plarium, we expect to see an increase in the company’s USD-based earnings as it grows its position within the online gaming sector.
Almost 60% of ALL’s earnings are generated in the USA and the company is projected to grow earnings by 19% to $1.40 per share during 2019.
ALL is one of several ASX listed companies that will benefit from a progressively lower Aussie Dollar.
Technically, we see solid support in the $27.90 area and an initial upside target of $31.25.
Aristocrat Leisure
Our ALGO engine triggered a buy signal for Aristocrat Leisure yesterday at $28.90.
As illustrated on the chart below, this ‘higher low” pattern is referenced to the May 23rd low at $27.58.
Although a recent earnings update stated that ALL’s digital revenue may not be increasing as fast as expected, revenue from older games continues to accelerate.
The company has forecast earnings of $1.40 per share for FY 2019, which fixes its current price at 20X forward earnings.
Internal momentum indicators have turned positive and we expect a move into the $32.00 area over a 6 to 8 month time horizon.
Aristocrat Leisure
Level 29 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453
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