Origin Energy is under Algo Engine sell conditions, however, we see value emerging from a fundamental analysis perspective. This should lead to a switch in the algo model from sell to buy in the near future.
The key positive is the strong cash generation from the APLNG project, which has led to the de-gearing of the company balance sheet. The next key driver will be the reinstatement of the dividend policy which will have the stock trading on a forward yield of 4.5%.
We expect the future dividend payments to steadily increase, which will help support the share price.
WPL offers 5% franked dividend yield and when combined with a covered call option, we’re generating 10% cash flow whilst allowing for a moderate level of capital growth.
ORG offers appealing capital growth prospects as the company pays down debt and reinstates a more progressive dividend policy.
Strong oil prices and increasing LNG production numbers are tailwinds that are likely to continue for ORG. Capital expenditure is also tracking lower than guidance and these factors combined are helping to add to group cash generation.
Amcor reports on Monday, we expect the earnings result to support the current share price rally. AMC has been a high conviction call, expressed on the blog and in the “Opportunities in Review webinar”.
Bendigo Bank, (BEN) reports on Monday, we’re cautious of this name and see the money being made on the short side.
Origin Energy (ORG) reports next Friday, we feel the LNG related income will surprise on the upside.
For more detail on the earnings season, register for Monday’s Opportunities in Review webinar.