CAR Reported 1H EPS

Posted on | by Leon Hinde | Leave a Comment on CAR Reported 1H EPS

CAR Reported 1H EPSg of 5%, is the current 22x P/E sustainable?

Assuming an acceleration from 5% EPS growth to 10% EPS (big ask) in the next 12 months it will place CAR on a 3.5% yield. We’ve seen other high PE stocks negatively rerate such as TPG and I think some caution and close watching of the earnings trend in CAR is required.

Global tech players such as eBay, gumtree, facebook etc are becoming more active in CAR’s business space. This may be part of the reason EPS growth is dropping off.

Chart – CAR

XJO – Index Update

Posted on | by Leon Hinde | Leave a Comment on XJO – Index Update

The XJO is holding support at 5600 points and maintaining a bullish short-term price structure.

We’re cautious due to stretched equity valuations, political risks in the Euro zone, debt stability in China and low revenue growth in many industry sectors.

To mange these concerns we’ve tilted portfolios to defensive assets and become aggressive with our covered call overlay. The bulk of our portfolio returns will come through dividends and option premium over the next short while.

Furthermore, we’re just not convinced the reflation trade the market has positioned around, will actually materielize in FY17.

Chart – XJO

ETF Watch – Crude Oil Falls On Increased Storage Data

Posted on | by Todd | Leave a Comment on ETF Watch – Crude Oil Falls On Increased Storage Data

West Texas Crude Oil prices dropped over 2.5% overnight as weekly stockpiles rose much greater than expected.

The American Petroleum Institute (API) reported crude oil in storage rose by 14.2 million barrels. That surge in storage was more than 5 times analysts’ forecast and the second largest increase in the history of the data series.

The front month futures contract traded as low 51.30, which is over 5.5% lower than last week’s high close of $54.40.

Some market commentators are pointing to increased US shale production and decreasing global demand as a headwind for crude prices going forward.  The next key price support  will be found at the psychologically important $50.00 level.

Chart – OOO ETF

MQG re-affirmed full year guidance

Posted on | by Leon Hinde | Leave a Comment on MQG re-affirmed full year guidance

Macquarie re-affirmed FY17 earnings will meet market expectations. This places FY17 revenue at $10.3b and cash earnings flat on FY16 at $2.1b.

FY17 EPS will be $6.10 and DPS $4.30, placing the stock on a forward yield of 5.3%.

We see Macquarie tracking sideways at best and downside risks increasing from a pickup in macro volatility.

Chart – MQG

 

Gold Catches Safe-Haven Bid

Posted on | by Todd | Leave a Comment on Gold Catches Safe-Haven Bid

Spot Gold prices hit a 3-month high of USD 1,235.00 as geopolitical tensions increased the yellow metal’s safe haven appeal.

Political uncertainty regarding upcoming elections in Europe, the US and Iran exchanging threats and unstable banking sectors in Italy and Greece have all added to investors’ interest in Gold.

From a technical perspective, the next key price target is at the November 11th high of USD 1292.00. We would suggest exiting long positions in that area.

Shares of Newcrest Mining have followed the gold price higher and have rallied over $3.50 during the last eight trading sessions. We expect to see the $24.50 level offer the next area of resistance and look to exit long positions in that range.

Chart – NCM

 

Transurban Lifts H1 profit

Posted on | by Todd | Leave a Comment on Transurban Lifts H1 profit

Shares of Transurban are up over 3.5% in early trade as the toll road developer increased H1 net profit 41.9% to $88 million on the back of strong traffic flows and operational performance.

The company also lifted revenue by 26.3% to $1.3 billion in the six months to December 31st.

As a result, Transurban will pay a partially franked interim dividend of 25 cents per share, up from 22.5 cents from the year ago period.

At $10.75 per share, we consider TCL a defensive income play. With limited scope on the upside, we suggest selling covered calls in the $11.25 area  for an annual return in the 10 to 12 % range.

Chart – TCL