Telstra Shares Firm On Venture Arm News

Posted on | by Todd

Shares of Telstra have started the new financial year off with a firmer tone rising  3% over the last three days.

Some of the positive sentiment has been driven by the news that TLS has sold 20% of its ventures arm to US private equity firm HarbourVest for $75 million.

The move is part of a broader plan for TLS to become a more technology-focused company and is consistent with the “Telstra2022” strategy announced last week.

HarbourVest has more than $50 billion in assets and the venture fund with TLS is expected to be valued at about $675 million.

After the $500 million loss from the Ooyala fiasco last year, the market may need some convincing that further investment in emerging 5G and next generation businesses will truly add to shareholder value.

It’s reasonable to expect that joining forces with the more experienced HarbourVest validates TLS’s commitment to the venture revenue stream and will see better results.

We believe that at current levels,  TLS represents good value for investors with a medium to longer-term investment time horizon, with an initial target of around $3.90.

At $2.71, TLS is trading at a 9.7 PE and is on a 7.6% yield.

Telstra

ALGO Update: Stay Long Cimic Group

Posted on | by Todd

Shares of Cimic Group have started the week over 4% higher and have reached a 2-month high of $44.75 in early trade.

Investors are reacting to the recent news that CIM was awarded a 4-year, $480 million contract by QCoal to continue mining services operations at QCoal’s Bowen Basin Mines.

Our ALGO engine triggered a buy signal for CIM on June 1st at $40.73 and the stock has been part of our ASX Top 100 portfolio since June of 2016.

From a technical perspective, we see solid support near $42.50 with an initial upside target at $47.50.

Cimic Group

ALGO Buy Signal For QANTAS

Posted on | by Todd

Our ALGO engine triggered a buy signal on QAN into yesterday’s  ASX close at $6.16.

This “higher low” pattern is referenced to the intraday low of $5.95 posted on February 5th.

A recent broker note from CITI has retained their buy rating on the stock with a $7.90 price target.

Part of CITI’s analysis focused on the airline’s dynamic hedging program, which has reduced the drag on their overall profitability during the recent rise in fuel prices.

QAN was added to our ASX Top 50 Model portfolio in July of 2017 at $5.25.

QANTAS

 

 

ALGO Update: Keep OZL On The Radar

Posted on | by Todd

Since posting a high of $10.70 on June 12th, shares of OZL have dropped over 12% and reached a 2-month low of $9.35 in early trade today.

As illustrated in the chart below, the price of High Grade Copper has dropped a similar amount over the same period of time.

The negative slide in copper prices has overshadowed the positive news that OZL has acquired the remaining 10% interest in Avanco Resources in  Brazil.

We consider this acquisition a fundamental boost to miner’s extensive mine life and will add to their “lean business” model outlined at the Macquarie  Mining Forum earlier this week.

Our ALGO engine triggered a buy signal on OZL at $8.60 on February 12th and the stock has been in our ASX Top 50 model portfolio since June of 2015.

We will look to add to long positions around the $9.20 support level over the near-term.Oz Minerals

High Grade Copper

 

 

ALGO Sell Signal For Amcor

Posted on | by Todd

Our ALGO engine triggered a sell signal for AMC into the ASX close at $14.60.

The “lower high”pattern is referenced to the $14.76 high posted on February 8th.

Since trading as low as $13.10 on May 4th, the share price has risen close to 12%. At this point, we suggest clients either take profits on open positions or use a covered call strategy.

For those interested in the covered calls, we suggest selling the $14.75 calls into October for 35 cents.

This will allow investors to receive the 30 cent dividend on September 4th while increasing cash flow into the portfolio.

Amcor

BOQ To Lift Key Lending Rates

Posted on | by Todd

BOQ has open the door for a full round of out-of-cycle rate hikes as the bank lifted its variable home loan rate and line of credit for both investors and owner-occupier loans.

Blaming rising funding costs, BOQ will raise both credit structures by 15 basis points effective July 2nd. 

With the RBA standing firm on rates until at least Q3 2019, we don’t expect BOQ to be the only  bank to snug rates higher on an out-of-cycle basis.

Our ALGO engine triggered a sell signal on BOQ on June 21st at $10.50. We maintain our negative outlook on the stock with a medium-term target near $9.40.

Bank of Queensland

ALGO Buy Signal For South 32

Posted on | by Todd

Our ALGO engine triggered a buy signal for South 32 into yesterday’s ASX close at $3.61.

The “lower high” pattern is referenced to the low posted on April 12th at $3.34. The stock has been added to our ASX Top 20 portfolio.

The share price has dropped about 8% since announcing an all-cash offer to acquire the remaining 83% of Arizona mining; a Canadian resource company which they own 17%.

The transaction does not need Canadian regulatory approval and should begin showing profits in the zinc and copper area by the September quarter.

We see solid support in the $3.40 area with an upside target in around $4.15 over the medium-term.

South 32

 

 

ALGO Update: Stay Long Northern Star Resources

Posted on | by Todd

Our ALGO engine triggered a buy signal on NST on May 24th at $6.16.

At the time, we referred to the company’s recent production forecast of 600,000 ounces of Gold for 2018 as a net positive.

However, a recent research note from UBS has upgraded their production to 690,000 ounces and set a 12-month target on the stock at $7.50.

Considering the recent weakness in Spot Gold, we expect NST to continue to trade higher as the Spot market improves. Northern Star

 

ALGO Sell Signal On GPT……3 Yield Names Go Ex-Div On Thursday

Posted on | by Todd

Our ALGO engine triggered a sell signal on GPT on June 21st at $5.36.

This “lower high” pattern is referenced to the high of $5.49 posted earlier this year on January 5th.

It’s worth noting that two other yield sensitive names, TCL and SYD also triggered ALGO sell signals last week. Furthermore, all three of these stocks will go ex-dividend on Thursday, June 28th.

As illustrated in the charts below, all three of these stocks have been in an uptrend since March.  We expect this pull back into their dividend should allow for better entry points for medium-term investors.

We see initial support for GPT at $4.70, with a stronger chart point at $4.50.

GPT

Transurban

Sydney Airport

Suncorp Is Entering The Sell Zone

Posted on | by Todd

Since posting a low of $13.30 on June 1st, shares of SUN have rallied over 11% and reached a 1-year high of $14.80 on Friday.

The selling pressure from the May 25th ACCC report on insurance rates seems to have subsided for now. However,  the scaling back of margins and other industry headwinds are still in play.

Technically, internal momentum indicators show that the share price is in overbought territory and a short-term correction is likely.

We see strong resistance in the $15.00 area and initial support just above $13.80.

Investors can trade the short side of SUN on our SAXO Go CFD platform. For more information about trading opportunities with CFDs, call our office at 1-300-614-002

Suncorp