Tabcorp – Value Emerging

Posted on | by Leon Hinde | Leave a Comment on Tabcorp – Value Emerging

 

Tabcorp is a relatively defensive income opportunity for portfolios, with earnings supported by potential synergy savings after the Tatts integration.

The company continues to progress the merger proposal with Tatts and the ACCC is scheduled to release its statement of issues on the 23rd of February.

By applying a covered call option, we’re able to allow 5 – 10% capital growth from the current price, whilst still generating 10%+ in annualised cash flow from the dividend and call option income.

We expect modest earnings growth into FY18, which will place the stock on a forward yield of 5%. TAH goes ex-div on the 7th of Feb paying out $0.125

Our buy range for Tabcorp is between $4.20 & $4.50.

Chart – Tabcorp

Tabcorp – 2nd of February

Posted on | by Leon Hinde | Leave a Comment on Tabcorp – 2nd of February

Tabcorp reports earnings on the 2nd of February.

We assume Tatts merger is completed by middle of this year and generates cost savings post integration of $100m plus.

FY18 revenue $5.2b, EBIT $800m, DPS $0.25 places the stock on a forward yield of 5%.

We’re buyers of TAH at $4.70 and selling call options post the earnings result.

 

Chart – TAH

 

 

 

TABCORP – 1H17 Earnings

Posted on | by Leon Hinde | Leave a Comment on TABCORP – 1H17 Earnings

Strong competition is likely to subdue 1H17 earrings growth for TABCORP.

The 5% sell-off the stock has had over the last two weeks sees TAH trading back into our value range and the stock is now producing a buy signal from our algorithm engine.

The announced merger on the 19th of October between TABCORP and Tatts Group along with the $500m share buyback, should help to underpin the share price.

FY17  revenue $2.2b, EBITDA of $550m, EPS of $0.24 places the stock on a forward yield of 5.5.

tah
Chart – TABCORP

 

Chart - Tatts Group
Chart – Tatts Group

Higher Low Pattern Stocks to Add to Your Watchlist

Posted on | by Leon Hinde | Leave a Comment on Higher Low Pattern Stocks to Add to Your Watchlist

The following group of stocks are in either established uptrends or, in recent months they’ve broken downtrends to begin building the early stages of a bullish “higher low” formation.

Many of these names have been mentioned previously in the blog and/or the monthly strategy video report. It’s worth loading these codes into your watch list and considering rebalancing your portfolio to include allocations towards some, or all of these names:

JHX, LLC, MQG, SHL, TWE, ANN, ANZ, ASX, CCL, CIM, COH, QUB, TAH, WOW & WPL.

With the lower growth names within the above basket, such as WOW & CCL, we compliment the position now with tight covered calls to enhance the yield to 10%+ per annum. With some of the other names, we give a little more breathing space as we expect 5 to 10% price appreciation before selling the call option overlay.

 

 

 

 

Tabcorp – FY18 Earnings Upgrade

Posted on | by Leon Hinde | Leave a Comment on Tabcorp – FY18 Earnings Upgrade

Tabcorp (TAH.ASX) will likely see $20m+ in earnings upgrade from the NSW Government’s decision to reverse its ban on greyhound racing from FY18.

FY17 revenue of $2.3b looks flat on the same time last year, with EBIT of $350m and EPS $0.23. Out into FY18 the investment case picks up. FY18 revenue $2.35b, EBIT jumps to $370m on $0.25 of EPS and a forward yield of 5%+. With a  relatively high payout ratio and 20x PE, the stock looks slightly expensive and we prefer to be a buyer on a dip back below $5.00

TAH.ASX

tah

CWN.ASX

Crown looks attractive at or near $13.00 with gaming revenue picking up in Macau and the pending breakup of the ASX listed Crown business splitting into 3 separate entities, unlocking value for shareholders.

cwn

 

 

 

 

Tabcorp FY16 Earnings Result

Posted on | by Leon Hinde | Leave a Comment on Tabcorp FY16 Earnings Result

Tabcorp (TAH.ASX) reported FY16 earnings with earnings in line with market expectations.  Full year dividend of $0.24

FY17 we look for underlying EPS growth of around 8 – 10% on $2.2b in revenue and EBIT of $370m. Forecast dividend of around $0.26 which will place the stock on a 5.2% yield.

There’s a potential buy on a pullback to $4.60 and we’ll be taking close notice of any algorithm signal we generate at or near this level.

TAH