WPL And ORG Are Looking Good, Technically

Posted on | by Todd | Leave a Comment on WPL And ORG Are Looking Good, Technically

Over the last several months, there have been many questions asked about the likely direction of energy-related stocks.

The fundamentals in the Crude Oil market are difficult to forecast and the political climate, domestically, may impact the future revenue of electricity markets.

However, from a technical perspective, both ORG and WPL look like they may be setting up for a move higher.

We currently see reasonable upside targets at $30.75 in WPL and $8.00 in ORG.

Woodside Petroleum

Origin Energy

 

ALGO Update: Buy The Dip In IPL

Posted on | by Todd | Leave a Comment on ALGO Update: Buy The Dip In IPL

On August 5th, we posted a buy signal on IPL at $3.20. Since then the stock has traded as high as $3.72, but slipped lower into the weekend.

One of the market stories supporting IPL has been that company officials have been actively buying shares, which is usually a good reflection of the company’s earnings and growth outlook.

More importantly, analysts’ earnings growth expectations of 90% over the next three years also illustrates a buoyant outlook for the business.

We still prefer the long side of IPL and suggest that investors could look to buy a pullback into the $3.45 support level.

Incitec Pivot

 

Chart Watch: The XJO Index

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The XJO 200 Index continues to trade within a broad, sideways “Flag” pattern bound by the June 8th low of 5624 and the June 15th high of 5834.

The low price for the week at 5637 was the result of weakness in the banking names, as well as, a drop in major miners BHP and RIO; which lost 2% and 1.5% for the week, respectively.

The continuation of the “lower high” price pattern suggests a downward bias with the next key support level near the February low of 5578.

ASX XJO Index

Trade Update: Stay Short FMG

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The steady decline in Iron Ore prices over the past two weeks turned into a rout as concerns grow about new supply combined with fears that Chinese steel production may have peaked for the year.

The Steel Index benchmark price for Northern China 62% Iron Ore sank by 7.4% to trade at $63.00 per ton on Thursday, an 11-week low. On a Year-to-date basis, Iron Ore has dropped over 20%.

On September 11th, we posted a sell signal on FMG at $6.05, with an initial target of $5.40. FMG shares closed at $5.12 on Friday and now target the July 24th low of $4.88.

Fortesque Metals Group

Are Ramsay Shares Ready To Rally?

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After posting a 6-month low of $61.05, shares of RHC rebounded Friday afternoon to close the week at $61.85.

RHC shares traded as high $76.15 on August 22nd and have dropped almost 20% over the last month.

While  there’s no guarantee that the $61.00 level is the medium-term turning point, we believe that value investors will do very well to start scaling into long positions at the current share price.

Core earnings per share are expected to grow by 8% to 10% in FY 2018, and the company’s global footprint now extends to 25,000 hospital beds and 1,150 operating theatres across its 221 hospitals and 13 health care and treatment facilities.

Further, as the company generates over 40% of its revenue outside of Australia, when the AUD/USD resumes its down trend, RHC is well placed to benefit from favorable currency movements.

Ramsay Health Care

Will the Tatts/Tabcorp Merger Get Over The Line?

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Shares of Tabcorp have been under pressure this week as the $11 billion merger with Tatts hit another legal hurdle.

On Wednesday, the lengthy merger talks were thrown into uncertainty with the Federal court finding in favor of arguments from the ACCC about why the deal should be reviewed further.

The combination of Tabcorp and Tatts is expected to deliver at least $130 million per year from synergies and business improvements, so shareholders are anxious to get the deal completed.

From the government’s perspective, it’s clear that they would like to continue consolidating corporate bookmakers to tighten up the regulatory aspect of the industry. It’s our base case that his merger will be completed in within a month.

However, we see scope for negative headlines to push the shares back into the low $4.00 support area. After the the merger is completed, we would expect to see TAH shares trade back into the $5.10/25 area.

   Tabcorp