eyeQ: 10 actionable trading signals for week beginning 21 October 2024

"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

Source: eyeQ. Long Term tactical models. Data correct as at 18 October 2024

PageGroup

Last week, recruiter PageGroup (LSE:PAGE) said “challenging market conditions” were weighing on performance. And it’s not unique to them. Fellow recruitment companies Robert Walters and Hays have issued similar statements.

But while the labour market remains in a state of flux, the broader macro picture is showing tentative signs of picking up. On eyeQ, macro model value is up just over 5% in October. It’s too soon to sound a definitive all-clear but there are signs recent macro headwinds may be receding.

The budget is clearly the dominant event for UK investors in the near term, so it makes sense to wait and see what Chancellor Rachel Reeves announces in two weeks’ time. But add Page to your watchlist of potential opportunities.

International Top 10

Source: eyeQ. Long Term tactical models. Data correct as at 18 October 2024

Toyota

Toyota Motor Corp ADR (NYSE:TM) is 13.37% cheap to overall macro conditions. That’s getting very close to the level where eyeQ fires a bullish signal.

It’s an interesting story on two fronts. For a long time, Toyota was an outlier among the big car companies. Whilst its rivals embraced electric vehicles (EVs), Toyota carved out a different path. It argued EVs weren’t popular enough with customers due to battery and re-charging issues. Instead, they focused their development efforts on hybrids. That decision now looks smart given global car sales increasingly show hybrids are indeed winning out over EVs.

And it’s an upbeat outlook from a macro perspective too. eyeQ model value is up 6% in the last month. The stock price has ignored improving macro momentum. Hence the cheap valuation and the potential for a good entry level very soon.