eyeQ: 10 actionable trading signals for week beginning 25 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.
25th November 2024 10:25
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 name | Macro Relevance | Model Value | Fair Value Gap |
| PageGroup (LSE:PAGE) | 74% | 370.87p | -7.62% |
| Howden Joinery Group (LSE:HWDN) | 79% | 854.48p | -4.14% |
| GSK (LSE:GSK) | 74% | 1396.91p | -4.09% |
| Wetherspoon (J D) (LSE:JDW) | 80% | 637.53p | -3.50% |
| Elementis (LSE:ELM) | 66% | 137.48p | -1.69% |
| IMI (LSE:IMI) | 78% | 1730.20p | 1.13% |
| Land Securities Group (LSE:LAND) | 65% | 601.16% | 1.45% |
| Grainger (LSE:GRI) | 78% | 229.51p | 2.33% |
| FirstGroup (LSE:FGP) | 68% | 140.68p | 5.65% |
| Playtech (LSE:PTEC) | 68% | 674.37p | 6.98% |
Source: eyeQ. Long Term tactical models. Data correct as at 22 November 2024.
GSK
GSK (LSE:GSK) has been having a rough time. The pharma giant posted lower-than-estimated quarterly sales earlier this month. The stock is down 28% from its May high.
Company executives maintain their positive outlook, citing their commitment to pursue new products and expansive lists of patent drugs. But what’s the macro perspective?
eyeQ’s smart machine shows the stock is sitting 4.09% cheap to overall macro conditions. But the bigger standout is eyeQ model value, which is trending firmly lower. It’s fallen 14.7% since the Federal Reserve cut rates in mid-September and is down 8.4% in the last month alone.
In other words, despite being cheap on our metrics, macro environment is getting worse and it’s too soon to buy the dip.
International Top 10
Company | Macro Relevance | Model Value | Fair Value Gap |
67% | $15.91 | -5.33% | |
68% | $205.06 | -4.03% | |
72% | $425.55 | -2.05% | |
76% | $16.59 | -1.80% | |
80% | € 50.86 | -1.39% | |
80% | $364.90 | 1.98% | |
77% | $939.62 | 2.53% | |
69% | $570.67 | 3.42% | |
82% | $138.66 | 3.85% | |
67% | $30.07 | 5.84% |
Source: eyeQ. Long Term tactical models. Data correct as at 22 November 2024
Amazon
Amazon.com Inc (NASDAQ:AMZN) has fallen around 7.5% in the last week and it’s not immediately obvious why.
Investing an extra $4 billion (£3.1 billion) into Anthropic would previously have been seen as unadulterated good news since it demonstrated it was a contender in the artificial intelligence (AI) arms race. These days it shows the costs involved in being an AI player, and, thus far, that means heavy capital expenditure without any signs of any meaningful returns for that spend.
It could be that, if Elon Musk is the big corporate winner from Trump’s election win, markets fear that means bad news for his arch-rival Amazon owner Jeff Bezos.
eyeQ has no view on such company stories. But with a macro relevance score of 68%, our model shows big picture stuff such as the Fed and the dollar are important. And model value is accelerating higher – it’s up 10.8% so far in November.
That means the recent fall in the stock price leaves it 4.03% cheap to overall macro conditions. That’s close, but not quite sufficient to trigger a new bullish signal. But value is building and this could be an interesting opportunity to monitor.
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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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