Coles Group is under Algo Engine buy conditions and is now up 21.88% since being added to the ASX 100 model portfolio back in August last year.
We have since had a further higher low formation at $15 and new buying support is building.
We see limited upside based on the current valuation and investors are advised to apply a covered call strategy to enhance the income return. For more details on the strategy, please call 1300 614 002.
Coles Group is under Algo Engine buy conditions following the August buy signal at $13.00.
Since then Coles has rallied to $16, supported by investor enthusiasm for the aggressive cost-cutting program. As the stock price settles back we highlight the $14.50 level, as an area where value will again re-emerge.
Buy Coles within the $14.00 to $15.00 price range.
Coles Group has been a stand alone listed business since November 2018, after being spun-out of Wesfarmers.
The financial performance to date has been patchy at best and the recent Coles Strategy Day highlights were the confirmation of the dividend payout of 80-90% for FY19, (which translates to an estimated $0.55 per share or 4.1% yield) and the $1bn cost out program.
We forecast flat earnings and revenue growth into FY20 and suggest investors sell a covered call option to enhance the income return.