eyeQ: 10 actionable trading signals for week beginning 15 July 2024
Experts at eyeQ use AI and their own smart machine to generate actionable trading signals. Here, they highlight 10 UK shares and 10 overseas stocks either cheap or expensive given current macro conditions.
15th July 2024 10:32
by Huw Roberts from eyeQ
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"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
This series of weekly articles uses eyeQ’s smart machine to highlight 10 stocks whose share price trades at either a discount or premium to eyeQ’s Model Value price (where macro conditions say the share 'should' trade).
A minus figure in these tables indicates a share trading below eyeQ’s Model Value, implying they are ‘cheap’ versus macro conditions. A plus figure screens as rich because the current share price is above eyeQ’s Model Value.
All companies must have a model relevance above 65%, which means the macro environment is critical and any valuation signals carry strong weight.
Here are definitions of terms used in the analysis:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
UK Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
76% | 240.88p | -0.04% | |
72% | 12645.70p | -3.15% | |
74% | 658.55p | -1.78% | |
83% | 3759.25p | -1.38% | |
70% | 250.44p | -0.58% | |
76% | 213.30p | 4.11% | |
85% | 532.45p | 4.92% | |
86% | 463.06p | 5.92% | |
76% | 80.09p | 8.89% | |
87% | 480.73p | 9.30% | |
Source: eyeQ. Long Term tactical models. Data correct as at 15 July 2024.
Playtech
Playtech, a tech company that offers gambling software and platform technologies worldwide, has recently signed a strategic partnership with MGM Resort to deliver live casino content.
That news has helped fuel a 15% rally in the stock; a rally that, from a macro perspective, looks increasingly stretched.
Macro conditions are improving (eyeQ model value has risen 8.5% in the last month) but the rally has moved further and faster, leaving Playtech shares 9.3% rich on our model. Big picture stuff such as growth and inflation do not support chasing the stock at these levels.
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
69% | $50.51 | -12.94% | |
81% | $41.84 | -7.42% | |
88% | $492.93 | -2.72% | |
79% | $77.44 | -2.73% | |
75% | $73.77 | -1.85% | |
69% | $508.34 | 0.62% | |
82% | $101.43 | 2.55% | |
82% | $175.19 | 3.54% | |
69% | $219.44 | 4.81% | |
71% | € 952.14 | 4.99% | |
Source: eyeQ. Long Term tactical models. Data correct as at 15 July 2024.
Alcoa
Alcoa is scheduled to publish their Q2 2024 earnings on 17 July, reporting on a quarter that saw aluminium prices rally hard at first but then give back around half those gains. Will the firm have capitalized on the performance of the metal?
From the big picture viewpoint, things look good: eyeQ model value posted an incredible +28.7% gain over the last month.
The stock is lagging the move in macro conditions – it currently sits 7.42% under eyeQ model value. That’s not enough to trigger a bullish signal from our smart machine, but it is worth adding to your watchlist as value is starting to build.
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Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
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