AMC reported 1H19 sales of US$4.6bn, EBITDA of US$678mn and underlying NPAT of US$330mn.
These numbers reflect a relatively flat outcome, based on the same time last year. The key for growth will be the integration of the Bemis business and the $180mn in cost synergies.
Amcor should return to a 3 – 6% EPS growth environment from next year, this supports the 4.4% dividend yield.
Amcor reports on Monday, we expect the earnings result to support the current share price rally. AMC has been a high conviction call, expressed on the blog and in the “Opportunities in Review webinar”.
Bendigo Bank, (BEN) reports on Monday, we’re cautious of this name and see the money being made on the short side.
Origin Energy (ORG) reports next Friday, we feel the LNG related income will surprise on the upside.
For more detail on the earnings season, register for Monday’s Opportunities in Review webinar.
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.
Amcor has been a high conviction buy strategy based on the likelihood of hedge funds covering their short positions in the stock ahead of the Bemis takeover being finalised.
As illustrated on the chart below, the upside target for Amcor is $14.50+.
Amcor
Shares of Amcor are poised to rally as the Bemis takeover deal is finalised.
Hedge funds who are short Amcor & long Bemis will begin unwinding the trade, which will add to the AMC buy-side demand.
We recommend accumulating Amcor at current levels.
In the local entertainment sector, Crown faced heavy selling last week following soft earnings numbers. With the stock now trading at $12.00, we believe value is now being presented.
Crown
In Monday’s webinar we looked at a number of high conviction ideas and positioned buy-side entry levels in oversold names.
The following stock codes are a reminder of companies that should have made it onto your watch lists:
ANN, LLC, AMC and IRE
Amcor looks oversold and we expect to see a rally back to $14.00 over the next 8 weeks.
Amcor announced a proposal to acquire Bemis in August, when the deal was valued at about $9 billion.
Bemis operates 56 packaging plants in 12 countries but most of its operations are in the USA; Amcor operates 195 packaging plants in 43 countries.
Amcor will shift its main share-market listing to the New York Stock Exchange in the all-scrip buyout, which would make it the world’s largest plastic packaging group.
It will ditch the ASX as its primary home, but still intends to give Australian shareholders exposure through Chess Depository Interests on the ASX.
We expect hedge funds to begin unwinding their short AMC long Bemis position which will create added buy-side demand into the market for AMC shares.
Amcor
Both AMC and TCL have been under recent selling pressure as bond yields in the US have moved higher.
The defensive nature of both businesses has seen their share price trade as a proxy to bonds.
With TCL and AMC both scheduled to have their AGM tomorrow, we believe there could be a rally in the share price as investors gain more clarity on future earnings growth.
We’re mindful that Algo Engine sell signals are displayed, however we’re willing to commit to Amcor as our preferred opportunity, of the two names.
Amcor
Our ALGO engine triggered a sell signal for AMC on August 2nd at $15.25.
The share price reached a 3-month low of $13.62 in early trade today and is entering into an oversold chart pattern.
Despite the recent uncertainty of trade friction between the US and China, we believe the outlook for the paper and packaging sector will remain stable and input costs will continue to drift lower.
We see technical support in the $13.35 area and would not be surprised to see a ALGO buy signal above $13.00.
Amcor
Amcor reported FY18 earnings in-line with market expectations. NPAT came in at US$724 millon.
AMC’s earnings headwinds have continued for longer than expected and will likely carry into FY19.
We expect the acquisition/merger with Bemis, (US listed competitor), to close in the new year and then synergy cost savings should help deliver a re-rating of the share price.
We see Amcor as good long term value although recognise that we are not under current algo buy conditions.
Amcor goes ex-div $0.32 o the 7th September.
Amcor
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