ALGO UPDATE: Buy Signal For InvoCare

Posted on | by Todd | Leave a Comment on ALGO UPDATE: Buy Signal For InvoCare

Our ALGO engine triggered a buy signal for Invocare (IVC) on yesterday’s ASX close at $13.60.

As Australia’s largest operator of funerals and cemeteries the share price has risen over 30% since trading at $10.50 in February 2016. IVC is currently trading with a dividend yield of 4.12%  and increased its half-year by 11.8% in it’s last report.

IVC is scheduled to report its latest half-yearly results on August 16th.

We consider IVC  a defensive stock as demographics point to a 3.3% potential growth rate for their industry.

The May 11th high of $15.50 is the reasonable target over the medium-term.

InvoCare

 

Suncorp – FY17 Earnings Fall Short of Expectations

Posted on | by Leon Hinde | Leave a Comment on Suncorp – FY17 Earnings Fall Short of Expectations

Suncorp announced earnings for FY17 which resulted in a sharp drop in the share price during yesterday’s session.

The group delivered NPAT of $1,075m up 3.6% on the same time last year. Suncorp also announced a final dividend of $0.40  taking the full year dividend to $0.73.

We’ve been warning about Suncorp in the monthly ASX 50 video reports and exited all Suncorp holdings 8 weeks back at $14.50 per share.  We remain cautious, as downside risks are increasing from higher costs and increased risk of higher BDD charges in the bank.

The previous point is not a unique issue to Suncorp, the pattern of higher expenses and under preforming loans will soon become more evident for all the banking names.

Chart – Suncorp

 

 

 

 

ETF UPDATE: When Will BBUS Take Off Again?

Posted on | by Todd | Leave a Comment on ETF UPDATE: When Will BBUS Take Off Again?

Since December of 2105, there have been three distinct periods of high volatility in the SP 500 which triggered sharp rallies in the BetaShare ETF with the symbol: BBUS.

BBUS is an inverse ETF, which means the share price will rise when the SP 500 trades lower. It’s also weighted, which means that a 1% move in the SP 500 Index will correspond to a 2.5% move in share price.

From December 17th, 2015 to January 19th, 2016, the SP 500 fell from 2077.50 to 1856.25.

This 10% sell off pushed the price of BBUS from $11.85 to $15.20, roughly a 28% gain.

As the chart below illustrates, over the course of 2016 there were two other periods when the BBUS saw  sharp moves higher of over 15%.

BBUS

The general point is that the listless drift continues for the SP 500, which hasn’t gained 1% or more in a single day for the last 70 trading sessions, the longest streak since 2007.

The price of BBUS is currently $6.70.

 

Resmed – 4Q17 Earnings

Posted on | by Leon Hinde | Leave a Comment on Resmed – 4Q17 Earnings

Global mask sales were  weaker than expectations, but we see F18 device  and mask growth rebounding.

FY18 revenue is forecast to grow by  of 5%+ and underlying EPS growth in the high single digits.

RMD is trading at 24x F18 EPS and we see the current sell-off as a buying opportunity. 

We need to give this name a wide range to find support and the buying zone is between $8.50 and $9.25. 1, 2 & 3 years out, the stock will be trading at higher prices. Keep an eye out for the next Algo buy signal in RMD!

Chart – RMD

 

 

RIO – 1H17 Earnings

Posted on | by Leon Hinde | Leave a Comment on RIO – 1H17 Earnings

RIO reported 1H17 underlying earnings of US$3.9bn, which was largely in line with market  expectations. EBITDA of US$9.0bn was also in line.

Lower capex resulted in cash flow and net debt coming in slightly better than exceptions (gearing now 13%)  with net debt end of June US$7.6bn. 

Buy-back was boosted by US$1.0bn increase, helping to offset a softer interim dividend. The interim dividend announced was US$1.10 and assumes 50% payout ratio.

In 2018 we expect RIO to see flat earnings growth at best, and we have the stock trading  on a forward yield of 4.5%.

Chart – RIO