ALGO Update: CTX Continues Slide Lower

Posted on | by Todd

Shares of Caltex have dropped over 10% this week, posting a 3-month low of $30.10 this morning,  as investors continue to sell the stock after a disappointing 1H 2018 result.

The worst part of the report was that the fuel division posted a $314 million profit, which is below the lower end of the company’s $315 to $335 million guidance.

In addition, corporate costs rose to $31 million compared to $21 million at the same time last year, which prompted a lowering of the interim dividend from 60 cents to 57 cents.

Our ALGO engine triggered a sell signal for CTX on June 26th at $32.68.  We see scope for a key support area near the $29.00 area.

Caltex

 

 

 

ALGO Update: NCM & EVN

Posted on | by Leon Hinde

NCM reported a strong earnings result and forward guidance will be supported by higher revenue and lower costs.

Gearing is now at 12% and with gold prices likely to rally from the current oversold levels, we see scope for NCM and EVN to find buying support in the near-term.

Both stocks have gone ex-dividend today and paid 15 cents and 4 cents, respectively.

 

 

Medibank – It’s An Income Story

Posted on | by Leon Hinde

We see Medibank staying within a $2.90 – $3.20 consolidation range. There was nothing in last week’s earnings result to suggest otherwise.

With the stock on 4.1% yield, little to no revenue growth and flat underlying earnings at best, we see MPL as a “tight buy-write” strategy.

The only opportunity here is to strip out the dividend, franking credits and option income to generate 10 – 12% cash flow from a relatively low risk stock.

Value emerges near support at $2.70.

Medibank Private

Brambles – FY18 Earnings Review

Posted on | by Leon Hinde

Brambles has been excluded from our models for the last 2 years, due to the lower high price formations, caused be deteriorating profit margins.

We’seen underlying group profit slip over the last 2.5 years from high single digit growth, to negative growth.

After reporting underlying EBIT of US$997, up 4% on the same time last year, we’ve hopefully seen the inflection point. A further positive is the announcement of the IFCO sale, which is likely to fetch up to US$2.5b.

With the stock trading 20x earnings on a 3% yield, we consider it close to full value.

Brambles

Buy RIO – Value On Offer

Posted on | by Leon Hinde

Our Algo Engine generated a buy signal recently in RIO following the “higher low” formation at $71.00

RIO will soon complete US$11 billion +  in  asset disposals and further realization of their portfolio is likely. With net debt now at historically low levels, we expect the bulk of this cash to be returned to shareholders via buy-backs and dividends.

Iron Ore prices appear to be steady at around US$63 p/t. We recommend accumulating RIO shares within the $65 – $73 range.

RIO