Month: January 2019

BHP, RIO and FMG have recently created lower high formations and consequently, have been removed from our ASX 100 model portfolio.

The weak December manufacturing data out of both the US and China will likely weigh on Iron Ore prices.

The graph below shows the trend in global PMI.

Our preference is to allocate towards the index, (rather than BHP or RIO),  or at an individual stock level, we are overweight healthcare and as our market recovery thematic, energy names such as WPL, STO & OSH.

BHP

RIO

FMG

ASX and Macquarie Group are both under Algo Engine buy conditions and are current holdings in our ASX 100 model portfolio.

ASX is likely to deliver 5% EPS growth and trades on a 3.5% yield.  When combined with a covered call the cash flow yield increases to 9% per annum.

Macquarie is likely to deliver 10% EPS growth and trades on a 5% yield. We see scope for 10 – 15% capital growth over the next 12 months.

TWE is under Algo Engine buy conditions and is a current holding in the ASX 100 model portfolio.

With the share price finding buying support at the recent $14 low, we consider TWE a compelling buy-write opportunity. The February earnings result should deliver mid-teen earnings growth and therefore, support the current 22x multiple.

For more detail on the covered call strategy, please call our office on 1300 614 002.

Amcor is expected to finalise the acquisition of Bemis in the coming weeks.

The continuation of raw material costs coming down, should provide a more supportive backdrop and into FY20 and FY21 we forecast Amcor to deliver high single digit earnings growth.

We have Amcor now trading on a 4.8% forward yield, based on FY19 EBIT of $1.2bn and dividends per share of $0.45.

Although AMC is under current Algo Engine sell conditions, we highlight the strong share price support,  in a relatively weak market at present. 23