eyeQ: 10 actionable trading signals for week beginning 18 November 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.
18th November 2024 10:25
by Huw Roberts from interactive investor
"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
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
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 |
70% | 148.31p | -12.70% | |
70% | 1441.98p | -10.84% | |
76% | 388.93p | -8.16% | |
79% | 656.92p | -4.94% | |
74% | 1339.75p | -4.10% | |
83% | 5316.88p | 1.54% | |
67% | 142.04p | 2.64% | |
78% | 467.63p | 3.56% | |
67% | 603.18p | 9.77% | |
73% | 609.18p | 16.21% | |
Source: eyeQ. Long Term tactical models. Data correct as at 17 November 2024.
Taylor Wimpey
UK homebuilder Taylor Wimpey (LSE:TW.) screens as 12.54% cheap to overall macro conditions, which is a big enough Valuation Gap to fire a bullish signal. But eyeQ model value is trending lower - it’s fallen 7.55% in the last month.
Put another way, the macro environment is getting worse for the stock, so even though it’s cheap on our metrics, it’s too soon to buy the dip from a macro perspective.
International top 10
| Company | Macro Relevance | Model Value | Fair Value Gap |
| Merck & Co Inc (NYSE:MRK) | 65% | $107.11 | -11.22% |
| Domino's Pizza Inc (NYSE:DPZ) | 80% | $467.67 | -8.65% |
| Airbus SE (EURONEXT:AIR) | 80% | € 147.57 | -6.91% |
| Pfizer Inc (NYSE:PFE) | 76% | $25.95 | -4.63% |
| Microsoft Corp (NASDAQ:MSFT) | 72% | $428.42 | -3.23% |
| Citigroup Inc (NYSE:C) | 71% | $67.13 | 2.37% |
| Hasbro Inc (NASDAQ:HAS) | 77% | $60.63 | 2.53% |
| Exxon Mobil Corp (NYSE:XOM) | 77% | $115.97 | 2.80% |
| UnitedHealth Group Inc (NYSE:UNH) | 69% | $562.09 | 5.09% |
| Alibaba Group Holding Ltd ADR (NYSE:BABA) | 69% | $81.08 | 8.47% |
Source: eyeQ. Long Term tactical models. Data correct as at 17 November 2024.
Merck
Pharmaceutical stocks are slumping on Donald Trump’s decision to appoint vaccine sceptic Robert Kennedy Jnr to a top role on US health policy.
Healthcare stocks fell broadly, with vaccine manufacturers taking the brunt of the losses. Merck & Co Inc (NYSE:MRK) sold off more than 3% on Friday in light of the appointment.
Companies fear Kennedy might obstruct the approval of new drugs and discontinue vaccines for patients on Medicare.
On eyeQ, Merck is back in regime for the first time since July. The latest sell-off leaves the stock 11.22% cheap to macro conditions. That would be a big enough Valuation Gap to fire a bullish signal except for the fact that the macro environment is deteriorating sharply: since the Federal Reserve’s 50 basis point rate cut in mid-September, eyeQ model value has fallen 16.7%.
This is a situation where a fair amount of bad news is in the price but that alone is not sufficient for us to turn bullish. We need to see eyeQ model value turn up, showing that macro conditions for the stock are improving.
These third-party research articles are provided by eyeQ (Quant Insight). interactive investor does not make any representation as to the completeness, accuracy or timeliness of the information provided, nor do we accept any liability for any losses, costs, liabilities or expenses that may arise directly or indirectly from your use of, or reliance on, the information (except where we have acted negligently, fraudulently or in wilful default in relation to the production or distribution of the information).
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Equity research is provided for information purposes only. Neither eyeQ (Quant Insight) nor interactive investor have considered your personal circumstances, and the information provided should not be considered a personal recommendation. If you are in any doubt as to the action you should take, please consult an authorised financial adviser.
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.
Please note that our article on this investment should not be considered to be a regular publication.
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