GPT is under current Algo Engine buy conditions and has been in the ASX 100 model portfolio since October last year.
The recent retracement from $6.32 back to $5.65 has triggered a new entry signal and we draw investors attention to the opportunity.
GPT is growing earnings at 5% per annum and trades on 4.8% dividend yield. Through adding a covered call option, we are able to boost the annualised cash flow to over 10%.
Buy within $5.50 to $5.75 range.
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The XJO has formed a “lower high” pattern within the existing Algo Engine buy signal structure.
The market has rallied 6% from the recent buy signal but we’re now mindful of the recent break of the “higher low” structure, as circled on the chart below.
5941 is resistance for the XJO and whilst the market remains below this level, some caution is required.
Names that remain supported within today’s broad market sell off include, AGL, CTX, GPT, WES, SCG, TCL, HSO & WOW. We remain cautious on the banks and select resource names .
XJO
GPT has been a high conviction “yield sensitive” stock recommended in the Monday morning “Opportunities in Review” webinar.
As the stock nears our $5.25 target, we recommend investors look to sell the $5.25 covered calls and strip-out the income through the call option and upcoming dividend.
GPT
Our ALGO engine triggered a sell signal on GPT on June 21st at $5.36.
This “lower high” pattern is referenced to the high of $5.49 posted earlier this year on January 5th.
It’s worth noting that two other yield sensitive names, TCL and SYD also triggered ALGO sell signals last week. Furthermore, all three of these stocks will go ex-dividend on Thursday, June 28th.
As illustrated in the charts below, all three of these stocks have been in an uptrend since March. We expect this pull back into their dividend should allow for better entry points for medium-term investors.
We see initial support for GPT at $4.70, with a stronger chart point at $4.50.
GPT
Transurban
Sydney Airport
Shares of GPT are up 1.5% in early trade in front of its AGM scheduled for Wednesday.
In the March quarter, GPT reported total shopping center comparable MAT growth of 2.1%, with 34,100 sqm of leasing space signed in the quarter and the acquisition of Sunshine Business Park in Melbourne for $74 million, with an initial yield of 6.1%.
The share price has hit $4.80 so far this morning and will see further resistance in the $5.00 area.
We consider GPT a solid “Buy/Write” strategy at current levels as the sold call option premium will enhance portfolio cash flow.
GPT will pay a 12.3 cent dividend on June 29th, which places its annual yield around 5.00%.
General Property Trust
Even though the US Stock market has stabilized over the last week, the US Treasury curve continues to flatten.
As illustrated in the chart below, the difference between the US two and 10-yr bonds has now dropped to 46 basis points (2.36% vs 2.82%).
This is the first time since 2007 that this spread has narrowed below 50 basis points, and, in the past, has been a level which has foreshadowed recessionary pressure.
It’s our base case that the bulk of the curve flattening has been a result the two-yr yields rising quickly and the longer dated yields trading sideways to lower.
In this respect, we would expect some of the local yield names to find some buying support this week.
Some of the stocks we prefer include; TCL, SYD, WFD, AMC and GPT.
For more information about how to trade the US yield curve, call our offices on 1-300-614 002
2-yr versus 10-yr yield spread
Transurban
Sydney Airport
Westfields
GPT Group is currently in our ASX 50 model portfolio and with price action bouncing off the $4.60 support level, we recommend investors look at a buy-write strategy.
GPT goes ex-div $0.123 on the 29th June.
GPT
We recommend buying GPT & WFD and placing a stop-loss orders below the recent support levels, indicated on the relevant charts below.
Investors may prefer to hold the position and sell call options to enhance the income, whilst staying exposed to the next round of dividends.
GPT will pay $0.123 dividend on 29th June.
WFD will pay $0.16 dividend on 11th August.
As the US yield curve flattens, which is caused by the long-end of the curve no longer increasing at the same rate as the shorter-end, we’ve started to see institutional money flow back into ASX listed yield sensitive names.
Our preference among these, within the property sector is GPT, SGP, and WFD, (based on valuation grounds).
Within Utilities and Infrastructure, we continue to like AGL, SYD and TCL.
We recommend buying GPT and selling a covered call option into September.
GPT will pay a $0.123 dividend on the 29th of June.
GPT
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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