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Shares of TAH have slipped about 6% lower over the last 10 trading sessions.
With their AGM scheduled for tomorrow, we believe is worthwhile to recap some of the company’s performance numbers released in August; this was the first report to reflect the TAH/Tatts merger.
The highlights of the report were: EBITDA up 69%, Revenues rose 71%, net profit of $28 million and EPS growth of 1.9 cents a share versus a 2.5 cent loss last year.
We believe the AGM will be a platform for TAH to announce further synergy savings from the merged entity, new product ideas and increasing revenue in the digital gaming sector.
TAH was added to our ASX Top 100 portfolio in February and our ALGO engine triggered a buy signal in early April at $4.22.
We see good value in TAH at current levels with a medium-term target of $5.40.
Tabcorp
Despite widespread downside pressure and increased volatility in the ASX 200 index, shares of QAN have stabilized above the $5.10 support level.
QAN will be releasing its September quarter trading update next Thursday and holding their AGM next Friday.
We believe that both of these events will be supportive of higher share prices.
QAN has been in our ASX Top 100 model portfolio for over a year and we suggest investors look to add to long positions in the $5.35 to $5.45 range.
Our medium-term target is $6.70 with a longer-term view to $7.35.
QANTAS
Last week we suggested a buy level for ASX Ltd near $58.00.
With yesterday’s low intraday print at $57.80, that downside buy target has been reached.
Also, with the share price sliding over 15% lower during the last month, internal momentum indicators are now oversold and a reversion higher looks likely.
At $58.00, the stock is on a forward yield of about 4%. We see the first level of resistance near $62.60 and up to $64.00 over the longer-term.
ASX Limited
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Since posting an intraday low of $2.60 on June 29th, shares of TLS have rebounded smartly and reached $3.40 in late August.
Last week’s market volatility has dampened investors interest in the stock over the last few days but, at $3.10, the share price is still 20% above the June low.
Tomorrow’s AGM will be a big test for bullish investors.
In focus will be the Telco giant’s “quantitative based” executive salary and bonus plan, as well as earnings updates across the company’s spectrum.
Given TLS’s target of 45% digital sales growth by 2021, we like the long side of the stock with a near-term target of $3.60.
Telstra
Last week’s extreme volatility in global equity markets has been a net positive for the local gold mining names.
After trading as low as $1060.00 in mid-August, Spot Gold reached a 2-month high at $1226.00 last Thursday.
As illustrated on the chart below, the yellow metal is still down more than 10% over the last 6-months.
However, with last week’s change in the overall risk dynamic of equities, investors may increase their holdings in Gold as a hedge against market uncertainty.
Combined with a weaker Aussie Dollar, we see stable gold prices lifting the shares of the local miners.
Our preferred names in the Gold sector are: NCM, SBM, SAR and EVN.
Spot Gold
Newcrest Mining
Santa Barbara
Saracen
Evolution Mining
Our Algo Engine has triggered buy signals in Sonic Healthcare, Resmed and CSL over the past few trading sessions.
RMD has experienced its first sell-off since rallying from $10 last year to $16 only a few weeks ago.
The ALGO engine is now flagging the new “higher low” at $14 and we suggest buying a 1/2 size allocation here and then waiting to see if we get another ALGO signal to add to the position.
CSL provides good long-term fundamentals. The PE is still expensive, however, 10 – 20% EPS growth is attractive! Accumulate at $180
SHL looks to be good value at $23. We see resistance is $25, so look to sell call options to enhance the return.
Chart: RMD
Chart: CSL
Chart: SHL
Our Algo Engine generated a buy signal in BXB last week and we highlight the price gap in the chart down to $10.06.
We’ve upgraded BXB to accumulate and our buy target range is $10 – $10.40
The potential spin-off of the plastic pallet pooling business will unlock value for shareholders and provides the catalyst for us to have a favorable medium term outlook on the business, along with modest earnings growth showing up in the latest 6-month result.
Brambles
Wesfarmers at $46 looks attractive heading into the spin-off of Coles later next month.
Growth in the separated businesses will be limited, so once the spin-off is completed, investors can sell covered call options and strip-out the returns from the dividends and option premium.
Note: WES released its scheme booklet as part of the Coles demerger. The vote is scheduled for November 15th with Coles to commence trading on November 21st.
Wesfarmers
Level 29 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453
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