Buy Crown Resorts and Star Entertainment. 

Posted on | by Leon Hinde

Crown Resorts & Star Entertainment report earnings on the 20th and 21st of February, (respectively).

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

Star

 

 

 

 

Amcor – Buying Interest Builds

Posted on | by Leon Hinde

In our “Opportunities in Review” webinar series, Amcor was identified as a high conviction buy with an upside target of $14.50.

The stock has rallied $1.00 from the original entry level and we continue to see a re-rating occur, which will see the stock price above $14.00.

Amcor reports half year earnings on the 11th of February. We feel the result may beat the market’s low expectations.

Amcor goes ex-div $0.265 on the 27th of February.  Adding a March $14.25 call option generates a further $0.15 per share of income.

 

 

Newcrest Mining – Gold Update

Posted on | by Leon Hinde

A strong result for NCM in Dec Q18, driven by out performance at
Cadia, (Cadia Valley NSW is one of Australia’s largest gold mining operations).  

Cadia set a record for both quarterly and half year gold production.

Gold production guidance for FY19 is unchanged at 2.5mn ounces.  This is around prior high levels of production reached a few years back.

The gold sector has been a hot spot for recent merger and acquisitions. The market is waiting to see if Newcrest makes a move. 

In FY 19 revenue will increase 10% and EBIT should increase to US$965mn.  The stock trades on a forward yield of 1.5%.

NCM

Gold

 

 

 

Oil Search – Algo Buy Signals

Posted on | by Leon Hinde

Oil Search is a current holding in our ASX 100 model portfolio.

We continue to rate OSH as a buy within the large cap oil and gas space. The strength of its earnings and quality of its growth profile should deliver long term shareholder value.

The market remains too conservative on the upside potential of the PNG expansion and optionality on Alaska projects.

Value at $7.25 – $7.50 as an entry point.

 

 

 

Iron Ore – BHP, RIO & FMG

Posted on | by Leon Hinde

Spot iron ore prices have rallied in the past days on the news of a second catastrophic tailings dam failure at a Vale-owned mine in Brazil.

Exceptions of reduced supply impacting the market, has driven up short term spot prices. Although, Iron Ores prices have been on a steady climb since the November low.

Long-term Iron Ore price chart.

We remain cautious of a potential pullback in RIO, BHP and FMG following the run up in prices and Algo Engine sell conditions.

Our preference continues to be in the energy names with OSH and WPL our core exposures.

 

Real Estate Investment Trusts – Outperform

Posted on | by Leon Hinde

Our Algo Engine has the following group of REITs under  buy conditions CHC, DXS, GMG, GPT, LLC, SCG, & VCX. These names all sit in the ASX 100 model portfolio.

Chart Hall Group is the best performing REIT within our models, up 54% after holding it for 574 days.

REITs have performed very well in recent weeks, due to the  moderating outlook for bond yields. If yields remain under pressure, defensive asset
classes, such as A-REITs and utilities will outperform through 2019.

A slowing global growth picture, low bond yields, rising equity market volatility are generally seen as positive catalysts for defensive sectors. The recent run up in these names means much of the value has already been captured. Therefore, we recommend investors use covered call options to enhance the income return.

As an order of preference, we feel large scale logistics, followed by office and then residential. 

EPS growth for the sector is running around 4 -5% and dividend yields are near 5% also.  Add a covered call and you’re able to achieve 10% annualised cash flow.

For more detail on covered call strategies please call of our office on 1300 614 002.

CHC

SLF Property ETF

 

 

Caterpillar – Algo Sell Conditions

Posted on | by Leon Hinde

Caterpillar was removed from our US model portfolio back in September last year. The lower high formation was punctuated last night following the weaker-than-expected quarterly earnings guidance.

The company pointed to tariffs and a slow down in China as major factors in its disappointing fourth-quarter result.

Revenue for the quarter was up 11% to US$14.34bn and adjusted earnings came in at US$2.55 per share.

Caterpillar said it now expects 2019 profit to increase to a range of $11.75 to $12.75 per share.

The results were largely below street estimates, which explains the 9% sell-off in the stock.

We’ll wait for the next Algo Engine buy signal before building a new position in CAT.