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South32 has been under Algo Engine sell conditions since forming a lower high pattern back in February at $4.00.
Weak alumina and coal prices saw 3Q19 earnings miss analysts forecasts. We now downgrade the earnings outlook by 15% and remain cautious on the prospects of a near term turnaround.
Ongoing declines in spot alumina and thermal cost prices, combined with rising costs, will translate to weaker earnings over the next 2 -3 years.
Flight Centre Travel Group downgraded FY19 underlying earnings by 15% to $345m due to softer trading conditions in the Australian leisure market. The company also cited higher operating costs across the business.
Based on the downgrade we now have the stock trading 19x FY20 earnings and 3.5% yield.
Buying interest in FLT is likely to increase near $35 – $36 range.
Lendlease looks attractive from a long-term valuation basis, especially relative to other opportunities within the real estate sector.
Although the share price may remain weak until a solution for Engineering &
Services is achieved, we feel the negatives are already priced in.
Based on FY20 earnings, we have the stock trading on a forward yield of 5%.
OceanaGold is a current holding in our ASX 100 model.
They have reported 2018 underlying EBITDA of US$364m and company cash reserves increased to US$108m.
Buy within $4.00 to $4.10 range.
Evolution Mining buy within the $3.00 to $3.30 range.
Bega Cheese comes onto our Radar following the price correction from $8.00 down to $4.51.
The PE valuation has corrected from lofty levels to now being 21x FY19 earnings and the stock trades on a 2.3% yield.
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Commonwealth Bank of Australia is under Algo Engine sell conditions and we see resistance building within the $75 – $76 price range.
When we look across the other bank names we see similar resistance building and view the recent rebound in price as a selling opportunity.
Evolution Mining is under Algo Engine buy conditions and is currently forming a higher low near the $3.00 price range.
The company recently delivered a softer than expected result with lower production and higher operating costs. These events combined with a softer gold price has seen the share price retrace from $4.00 to $3.20.
We anticipate a pickup in the next quarter which should see overall FY19 production in the upper band of the groups guidance range.
A new round of “risk off” sentiment by equity investors will also be supportive of gold prices.
Add this one to your watchlist and look for an entry point between $3.00 & $3.20.
The below long term graph of the gold price shows the recent retest of the US$1325 range.
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