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WPL – Algo Buy Signal

WPL is a current holding in our ASX 100 model portfolio.

Recent production guidance suggests 2019 will likely deliver relatively flat production growth.  WPL trades with an implied oil price of around US$55, (versus current Brent Crude at $US74).

The overnight announcement from the Trump administration stating it will no longer grant sanctions waivers to any country that is currently importing Iranian oil, is helping to provide support across the energy sector.

WPL goes ex-div $0.73 on the 23rd Aug.

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Boral – FY19 Trading Update

Boral has been under Algo Engine sell conditions since late 2017. The stock made a new low last month following the company downgrading FY19 earnings.

Weather and project delays were cited as the main reasons for earnings  coming in below prior forecasts.

With the share price falling from $8.00 in February 2018, to a low at $4.40 in March, value continues to stand out in historical terms.

Based on expected FY20 earnings, we have Error with ischart shortcode. No symbol attribute defined.trading on 10x PE offering a 6% dividend yield.

Accumulating the stock throughout this year, will likely prove a long term  discounted entry level.

 

 

 

 

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Woolworths – Valuation Review

Woolworths Group is a current holding in our ASX 100 model portfolio, as well as the ASX 20 & 50 models.

The stock is up over 9% including dividends after being added at $28.50 back in August last year. With the share price trading at 24x forward earnings and only a 3% dividend yield, we consider it expensive.

We suggest selling a long dated European call option to enhance the income. For more detail on the strategy, please call our office on 1300 614 002.

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CBA – Bank Review

CBA:ASX is under Algo Engine sell conditions, (as are all banks excluding Macquarie & ANZ), and we highlight the technical lower high pattern at $73.50.

CBA has announced they intend to suspend preparations for the demerger of wealth and mortgage broking business, with no time frame provided.  We feel this adds another layer of complexity with executing the business strategy to become a simpler, streamlined business.

CBA trades on 15x earnings and 5.8% dividend yield.

 

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Suncorp – Weak Earnings Outlook

Suncorp Group is under Algo Engine sell conditions following  a lower high formation at $13.50.

We see reduced scope for Suncorp to reprice mortgages, given the
current political and regulatory climate, and we expect to see ongoing margin
pressure.

Stay on the short side and watch for the share price to trend lower with the 10 day average crossing below the 50 day average as a reference point.

 

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Dow Jones – Sell Signal

Global markets are in the early stages of rolling over, as a combination of weaker data from China, Europe and the US weighs on investor confidence.

The U.S. economy added just 20,000 jobs last month, marking the weakest month of job creation since September 2017. Economists polled by Dow Jones expected a gain of 180,000.

Data out of China showed its exports slumped 20.7 percent from a year earlier, far below analyst expectations and wiping out a surprise jump in January.

The European Central Bank slashed its growth forecasts for the euro zone and announced a new round of policy stimulus.

As readers will be aware, we’ve been tracking the XJO to break the 10 day moving average as a confirmation of the short-term indicators supporting the longer-term Algo Engine “sell” signal. If we apply the same analysis to the Dow Jones, we see a more advanced break in price action.

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Buy IPL $3.00 – $3.20 Range

IPL is under Algo Engine buy conditions following the higher low formation at $3.20.

The stock price has been sold off following concerns around the impact of the Queensland floods. In particular, the short term closure of the Phosphate Hill plant and the impact to rail transport.

With the stock now trading 10x FY20 earnings we see much of the downside risks, already priced in.

Accumulate  IPL between $3.00 and $3.20

 

 

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Crown Resorts – 1H19 Earnings

Crown Resorts {CWN.ASX} reported 1H19 earnings and the result was negatively impacted by increased expense ratio and lower revenue from VIP turnover.

The A$400m buyback announced as at the FY18 result, has a further $270m to go.

CWN  remains under Algo buy conditions and with the stock trading on  a 5% forward yield and low single digit EPS growth, we continue to see value.

 

 

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Lendlease – 25th Feb Key Date

Lendlease is a current holding in our ASX 100 model portfolio.

The market has discounted LLC share price due to substantial impairments on troubled projects within their engineering business.

The group reports earnings on the 25th of Feb and we expect to hear whether an exit of this business is likely.  Investors have lost patience regarding a turnaround and a trade sale or spin-off of the division will be well received by the market.

If confidence is restored and investors can look through the short-term troubles, LLC could re-rate back towards $15.00

 

 

 

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Whitehaven Coal – Algo Sell Signal

Whitehaven WHC Coal was removed from our ASX100 model portfolio on the 31st January following the Algo Engine sell signal at $4.99

The company announced last Friday, net profit after tax increased 19% to $306m for the six months ended December 31.

The market reacted negatively to the higher production costs and the lower production guidance for the remainder of the financial year.

The stock price has now sold off over 10%, since being removed from the model.

Whitehaven WHC announced a special dividend of 5¢, in addition to the 15¢ interim dividend. This is up slightly on the same time last year.