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.
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Our ALGO engine triggered a buy signal for LLC last Friday at $18.70.
We mentioned in our commentary that investor support should emerge near the $18.00 support level; the low for today has been $18.02
From a technical perspective, internal momentum indicators have reached an extremely oversold level and a price reversion higher looks likely from here.
We see the first level on upside resistance near the October 2nd high of $19.60.
Lend Lease
Our ALGO engine triggered a buy signal for LLC into Friday’s ASX close at $18.70.
This “higher low” pattern is referenced to the intraday low of $17.25 posted on April 27th.
Since reaching an all-time high of $21.70 on August 7th, the share price has dropped over 14% and traded to a 5-month low on Friday.
We believe the company is well positioned in the infrastructure construction space and its international expansion will diversify the risk of a slowdown in the domestic residential market.
At current levels, we calculate LLC is trading at about 13X FY 19 earnings and expect the stock will find investor interest above the $18.00 support area.
Lend Lease
Lend Lease has filled the price gap to $18.50 and appears to have found price resistance.
Our initial downside target is the April 9th low of $17.05.
Lend lease
Our ALGO engine triggered a sell signal in LLC into the ASX close at $17.88.
The “lower high” pattern is referenced to the October 17th high of $18.70.
Shares of LLC have risen about 16% since posting solid H1 results three weeks ago, which included a $500 million share buyback scheme over the next 12 months.
However, the internal momentum indicators are now approaching overbought territory.
We see strong technical resistance in the $18.15/20 area and expect the share price to revert back to the $17.20 support area over the near-term.
Lend Lease
Our Algo Engine generated a buy signal in Lendlease back in October. Since then the stock has moved down to find buying support at $15.50.
LLC is in the ASX 50 model and we expect buying support will soon see the share price recapture $17 in the weeks ahead.
Place a stop-loss order on a break back below $15.50.
Lendlease
Shares of property group Lendlease popped to an 18-month high of $15.84 in early trade as the company announced a sharp increase in after tax profit.
For the six months ending December 31st, Lendlease posted a 12% rise in net profit to $394.8 million.
The stronger result was largely based on the 40% increase in earnings for their construction division, with their investment and development divisions posting pretty much unchanged results from last year.
The company announced an interim dividend of 33 cents per share (fully franked), which was slightly higher than the street’s expectation of 30 cents per share.
The company’s return on equity for the last six months reached 13.7%, which is at the upper end of their 10 to 14% target guidance.
The following group of stocks are in either established uptrends or, in recent months they’ve broken downtrends to begin building the early stages of a bullish “higher low” formation.
Many of these names have been mentioned previously in the blog and/or the monthly strategy video report. It’s worth loading these codes into your watch list and considering rebalancing your portfolio to include allocations towards some, or all of these names:
JHX, LLC, MQG, SHL, TWE, ANN, ANZ, ASX, CCL, CIM, COH, QUB, TAH, WOW & WPL.
With the lower growth names within the above basket, such as WOW & CCL, we compliment the position now with tight covered calls to enhance the yield to 10%+ per annum. With some of the other names, we give a little more breathing space as we expect 5 to 10% price appreciation before selling the call option overlay.
Watch LLC, SHL, ASX and AMC as stocks that are trading on support.
Most property stocks have broken their long term uptrends and are displaying the early signs of a “rollover” type pattern. We’ll most likely see a bounce from the current oversold level, driven from an outcome on the December Fed rate hike. However, the probability of a bearish lower high in the next 3 to 6 months will mean the counter trend trade from the current lows will be short and explosive but the real opportunity to watch will be the short side trade in 2017.
The above picture applies to most property trusts and property development companies. The exception appears to be SGP and LLC. Out of the two names, my preference remains Lend lease.
FY17 should deliver EBITDA of $1.2b, EPS of $1.30 and DPS of $0.68 placing the stock on a forward yield of 4.9%
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