The Star Entertainment Group was recently flagged as an Algo Engine buy signal and we highlighted on the blog the support at $4.50. Since then the stock has rallied and the momentum indicators continue to point higher.
The Star Entertainment Group is now under Algo Engine buy conditions following a recent high low formation at $4.55.
We’re attracted to the longer-term fundamentals for Star but have been reluctant to hold the position whilst the stock was under sell conditions. The recent break higher in price and the shift to Algo buy conditions, means we’ve added Star back into our model portfolio.
The February earnings result will be a key catalyst, where the market will be looking for earnings growth beyond just cost control.
The Star Entertainment Group looks oversold and we expect to see buying interest build.
SGR goes ex div $0.13 on the 13th of August.
The Star Entertainment Group reported 1H19 earnings yesterday and EBITDA was up 3% on the same time last year, at $297m.
SGR delivered a strong result with revenues up over 6%. We have the stock now trading on a 5.3% dividend yield and see low single digit earnings growth ahead.
We recommend adding a covered call option to enhance the income return.
Both companies’ share price have been under pressure over the past 6 months, which has been a surprise given the strength in VIP gaming revenue that was evident in the last reports.
We feel again, the market has been too negative coming into the upcoming earnings. We expect to see positive upside surprises, relative to current market expectations.
Crown is under Algo Engine buy conditions, therefore, we recommend buying the stock.
SGR is under sell conditions, however, we feel the stock is oversold and suggest buying call options. Buying call options gives you limited risk on the downside and unlimited gains on the upside.
To discuss this strategy, please call our office on 1300 614 002.
Crown is a current holding within the ASX100 model portfolio.
The share price was oversold at $11.50 and we’re now starting to see buying interest build.
Also, consider SGR with stop loss below recent pivot low.
Crown’s trading update was weaker than expected as main gaming floor revenue was down 0.6%.
Non-gaming revenue growth was 3.5%, while VIP turnover growth was up 13%.
Star Entertainment showed domestic revenue growth of +6.7% but VIP growth disappointed with it coming in flat on the prior period.
Crown looks like good “value” at $12 and is supported by a current ALGO Engine buy signal.
Aristocrat (ALL:ASX) is also looking well supported near the $26 range.
We currently hold Crown Resorts in our ASX top 100 model portfolio, following a Algo Engine buy signal back in February at $12.50.
The stock has recently retraced from the $14.59 high made on the 10th August.
We now feel the sub-$13.50 level provides an opportunity to accumulate Crown shares at a fair valuation.
NOTE: Star Entertainment is also back in the buy zone between $5.13 – $5.30
Shares of Star Entertainment have surged over 7% higher to reach a two-month high of $5.45 in early trade.
The company released full-year results this morning which showed underlying profits rose 20% to $258 million versus the street’s estimate of $248 million.
Much of increase was focused on foreign “high rollers” which lifted SGR’s turnover by 54% to $61 billion.
We see chart resistance at $5.50 over the medium-term.
SGR goes ex-dividend for 13 cents on August 28th.
Start Group Entertainment
Star report their earnings on the 24th August and we expect to see stronger numbers than the market is currently forecasting.
SGR goes ex-div on the 28th August $0.085