IAG – Algo Buy Signal

Insurance Australia Group is now showing an Algo Engine buy signal and remains a long term holding in our ASX 100 model portfolio.

We see value emerging and consider the $7.50 price range as support and expect buying interest to remain solid.

Look for a move higher into the $8.00+ range and then sell covered call options to enhance the income return.

For more detail on the option strategy, please call our office on 1300 614 002.

 

 

IAG – Finding Buying Support

IAG is under Algo Engine buy conditions and we see support building near $7.10.

The company will report half year earnings on the 6th of February. The market is looking for NPAT to be around $260mn.

We suggest buying IAG and selling an out of the money call option to enhance the return.

IAG goes ex-div 14 cents on the 20th of February.

Buy IAG At Current Levels

In our Opportunities in Review webinar series, we’be been suggesting IAG as a buy below $7.00.

A recent broker note estimates that IAG will have a further $600 million to spend on shareholders, which could come in the form of a $300 million special dividend and $300 million share buyback.

Look for a rally to $7.50 and sell covered call options.

IAG

IAG – buy the dip

Today’s earnings miss in IAG, along with lower guidance into FY19 has seen a sharp sell-off with price moving back to $7.50.

We see long term value for investors who accumulate the stock within the $7.25 to $7.50 range.

IAG goes ex-div $0.20 on the 6th of September.

 

IAG – Opportunity Builds

Although we don’t have a current Algo Engine buy signal in IAG, the stock is in the ASX 50 model portfolio from the original higher low pattern in 2017.

The recent share price retracement, from $8.70 back to yesterday’s low of $7.84, means we have the stock on our radar again.

Strong earnings growth, 5% fully franked dividend yield and an increase to the share buy back program should provide a floor under the share price.

We see IAG as a solid “buy/write” opportunity delivering 10 – 12% annualised cash flow.

 

IAG

 

 

IAG – Buy-write Producing 10-12% Cash-Flow

The key take-away from the this week’s AGM is that IAG remains confident of reducing its cost base by >A$250 million from A$2.5 billion to A$2.25 billion by 2020.

The company also reaffirmed the outlook for 10% EPS growth over the next 3 years.

IAG provides a solid buy-write opportunity with the stock retracing back from recent highs and now finding support at $7.50.

FY19 profit is forecast to be $1billiWn, EPS $0.45 and DPS $$.36, placing the stock on a forward yield of 4.8%.