S32 – Remains Under Sell Conditions

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 – Earnings Downgrade

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 – Long-Term Value

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%.


Evolution Minning – Approaching Support

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.