eyeQ: 10 actionable trading signals for week beginning 28 October 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.
28th October 2024 10:02
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 |
77% | 2553.97p | -9.42% | |
75% | 65.52p | -8.48% | |
77% | 776.86p | -7.01% | |
65% | 1539.13p | -6.26% | |
73% | 709.42p | -5.57% | |
70% | 1148.21p | -5.53% | |
74% | 160.75p | -3.78% | |
82% | 373.61p | -3.26% | |
73% | 1304.80p | -0.99% | |
72% | 236.82p | 1.90% | |
Source: eyeQ. Long Term tactical models. Data correct as at 25 October 2024
GSK
Shares in GSK (LSE:GSK) are down by about 20% since May 2024 and sit near 12-month lows. The pharma giant can’t seem to shake off negative sentiment, which analysts seem to blame on weaker vaccine (Shingrix) sales in the US or the $2.2 billion settlement over heartburn drug Zantac.
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Note, though, macro is reasserting itself as a key driver of the stock price – eyeQ macro relevance is now 65% meaning, for the first time in a year, GSK is in a macro regime.
So, what is the macro story?
The bad news is model value is falling, it’s down around 2% over the last month.
The good news? The stock has sold off even more aggressively and now screens as 6.57% cheap. Q3 earnings are due to be released Wednesday and will be critical. But keep an eye on macro too, and the suggestion is a fair amount of bad news is already in the price.
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
76% | $162.44 | -14.77% | |
68% | € 23.95 | -9.12% | |
68% | $212.20 | -3.49% | |
76% | $28.80 | -1.22% | |
81% | $120.38 | -0.78% | |
76% | $75.82 | 1.30% | |
84% | € 94.41 | 2.72% | |
77% | $93.82 | 3.69% | |
Porsche Automobil Holding SE Vorz-Inhaber-Akt stimmrechtslos (XETRA:PAH3) | 71% | € 38.78 | 3.82% |
70% | $72.28 | 11.53% | |
Source: eyeQ. Long Term tactical models. Data correct as at 25 October 2024
Coinbase
The cryptocurrency flagship company stock is up around 27% in October, benefiting from a sector-wide rally that saw the price of Bitcoin close to its all-time high.
The firm is scheduled to release its earnings on Thursday and, while these will be critical, note for the first time in a year that model confidence in eyeQ’s smart machine is above 65% - the crypto exchange is back being driven by macro forces too.
In the last four weeks, model value has improved by 12.54%. Stronger economic growth and healthy risk appetite have created an environment that is supportive of Coinbase Global Inc Ordinary Shares - Class A (NASDAQ:COIN).
And the stock has slightly lagged that improvement in overall macro conditions. But not enough of a lag to fire a bullish signal - the stock sits a comparatively modest 3.49% under eyeQ model value.
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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