eyeQ: 10 actionable trading signals for week beginning 2 December 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.
2nd December 2024 09:11
by Huw Roberts from eyeQ
"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 |
68% | 340.65p | -12.43% | |
76% | 1435.14p | -7.50% | |
83% | 864.34p | -5.92% | |
70% | 140.45p | -5.29% | |
80% | 654.78p | -1.99% | |
66% | 599.71p | 0.55% | |
81% | 381.62p | 0.79% | |
78% | 1756.54p | 3.49% | |
67% | 145.22p | 4.08% | |
70% | 68.25p | 6.06% |
Source: eyeQ. Long Term tactical models. Data correct as at 29 November 2024.
JD Wetherspoon
Macro conditions for the pub chain Wetherspoon (J D) (LSE:JDW) have been deteriorating for months. eyeQ model value was around 770p at the end of August and it hit a local low of 636p last week.
First it was the wait for the Budget that weighed on consumers. And then, since Chancellor Rachel Reeves’ policy on employers’ national insurance contributions was announced, the stock has been hit further by fears around rising labour costs and possible layoffs.
It’s early days but eyeQ model value is showing tentative signs of a bounce. Is the macro environment starting to turn around? Long-term investors will probably err on the side of caution, and wait and watch. And to be fair, ideally we’d see a better entry level. Right now, the stock sits just 2% cheap to overall macro conditions.
But macro relevance is trending higher – it’s been rising since September and is now 80% – so this is one to add to your watchlist. Track eyeQ model value and Fair Value Gap for a potential opportunity in this popular consumer stock.
International Top 10
Company | Macro Relevance | Model Value | Fair Value Gap |
74% | $85.43 | -15.63% | |
65% | $348.30 | -8.62% | |
68% | $76.41 | -7.21% | |
67% | $81.78 | -5.44% | |
73% | $20.02 | -4.04% | |
74% | $969.18 | 0.28% | |
70% | $205.68 | 1.06% | |
73% | $69.13 | 2.46% | |
69% | $61.11 | 4.25% | |
66% | $60.96 | 6.42% |
Source: eyeQ. Long Term tactical models. Data correct as at 29 November 2024.
Lam Research Corp
The US exceptionalism trade that surged in the aftermath of Trump’s election win is still on display, but there are some potentially important rotations taking place. For years we’ve been used to technology (especially semiconductors) leading the US equity market higher.
More recently, though, tech has struggled and other sectors have assumed market leadership.
eyeQ model value for Lam Research Corp (NASDAQ:LRCX) has been range-bound in Q4. Ideally, we’d see it rise above recent highs in the mid $90s to start getting excited about renewed macro momentum for the semiconductor stock.
However, the stock does screen as cheap – it’s 15.63% below model. And our model shows Lam is significantly more sensitive to economic growth, risk aversion and credit spreads relative to the broader (S&P 500) US equity market.
Put another way, if you believe the Trump presidency can fuel an ongoing “risk-on” mood in equities, and that the AI revolution has more legs yet, then Lam offers an attractive entry level.
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).
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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.
Please note that our article on this investment should not be considered to be a regular publication.
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