eyeQ: 10 actionable trading signals for week beginning 27 January 2025
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.
27th January 2025 09:50
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 |
| Associated British Foods (LSE:ABF) | 71% | 2224.08p | -18.02% |
| PageGroup (LSE:PAGE) | 78% | 365.96p | -14.22% |
| Howden Joinery Group (LSE:HWDN) | 81% | 840.40p | -7.26% |
| Grainger (LSE:GRI) | 75% | 223.25p | -6.82% |
| Shell (LSE:SHEL) | 70% | 2671.09p | -1.95% |
| Aviva (LSE:AV.) | 67% | 487.45p | 3.89% |
| Elementis (LSE:ELM) | 74% | 146.14p | 4.86% |
| IMI (LSE:IMI) | 67% | 1858.04p | 5.92% |
| Reckitt Benckiser Group (LSE:RKT) | 68% | 4584.17p | 9.62% |
| Metro Bank Holdings (LSE:MTRO) | 79% | 73.86p | 19.10% |
Source: eyeQ. Long Term strategic models. Data correct as at 26 January 2025.
Associated British Foods
Most commentary about the UK economy in general, and the retail sector in particular, remains pretty bleak. When cut-price stores such as Primark are struggling it's a powerful anecdote that times are tough; and that's exactly the picture that emerged last week when its owner Associated British Foods (LSE:ABF) provided a trading update. Several analysts including Morgan Stanley and Citi lowered their rating on the stock.
Against that, however, there is some potential consolation from the macro side of the argument. ABF spent most of 2024 with low model confidence on eyeQ but, right now, the big-picture stuff such as growth and inflation explains 71% of price action.
Model value has been falling for a couple of months, but macro conditions are showing tentative signs of trying to stabilise. That means the latest sell-off in the share price has taken the stock 18.02% below eyeQ fair value. That's enough to trigger a bullish signal. Maybe all the doom-and-gloom is already reflected in prices down here?
International Top 10
| Company | Macro Relevance | Model Value | Fair Value Gap |
| ASML Holding NV (EURONEXT:ASML) | 75% | € 803.40 | -14.66% |
| Colgate-Palmolive Co (NYSE:CL) | 75% | $98.11 | -11.65% |
| Liberty Global Ltd Ordinary Shares - Class A (NASDAQ:LBTYA) | 67% | $13.06 | -9.93% |
| Bayerische Motoren Werke AG (XETRA:BMW) | 75% | € 80.70 | -2.36% |
| Amazon.com Inc (NASDAQ:AMZN) | 68% | $237.64 | -1.19% |
| Peloton Interactive Inc (NASDAQ:PTON) | 74% | $8.11 | 3.46% |
| Airbus SE (EURONEXT:AIR) | 67% | € 159.83 | 4.32% |
| Warner Bros. Discovery Inc Ordinary Shares - Class A (NASDAQ:WBD) | 71% | $9.30 | 9.27% |
| Lvmh Moet Hennessy Louis Vuitton SE (EURONEXT:MC) | 76% | € 665.99 | 9.28% |
| Tesla Inc (NASDAQ:TSLA) | 76% | $358.74 | 11.77% |
Source: eyeQ. Long Term strategic models. Data correct as at 26 January 2025.
LVMH
Lvmh Moet Hennessy Louis Vuitton SE (EURONEXT:MC) has reclaimed the title of Europe’s most valuable stock from Novo Nordisk AS ADR (NYSE:NVO). Last year its shares slumped 13%, but recent earnings updates from Compagnie Financiere Richemont SA Class A (SIX:CFR) and Brunello Cucinelli SpA (MTA:BC) have lifted expectations for the luxury brand sector.
eyeQ’s smart machine doesn’t fully agree with the positive outlook. Model value has increased by 11.22% in the last month, but the stock finds itself sitting 9.28% rich to overall macro conditions.
Model value is rising, so the macro environment is improving. But the richest valuation gap since October means the market has priced in a fair degree of good news already.
Even for those constructive on the stock, these are not the best entry levels.
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.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.