eyeQ: 10 actionable trading signals for week beginning 30 September 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.
30th September 2024 10:00
by Huw Roberts from eyeQ
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"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 |
82% | 806.83p | -6.30% | |
83% | 3276.21p | -5.89% | |
69% | 1246.31p | -4.21% | |
76% | 954.93p | -4.14% | |
72% | 168.97p | -2.10% | |
69% | 4992.33p | 4.73% | |
78% | 236.67p | 5.14% | |
71% | 370.44p | 5.98% | |
69% | 7838.54p | 6.06% | |
73% | 483.25p | 10.54% |
Source: eyeQ. Long Term tactical models. Data correct as at 29 September 2024.
Howden Joinery
Howden Joinery Group (LSE:HWDN) is one of the largest kitchen and joinery producers in the UK, selling to consumers, the construction industry and wider trade. As such, it is an obvious play on the UK housing market.
Macro conditions have been improving this year and eyeQ model value hit a 2024 high (1,003p) just a few weeks ago. However, in the past few weeks model value has noticeably rolled over. It now sits at 955p.
Howden sits 4.14% cheap to that level, so some bad news is in the price already. But once again the key here is to watch model value itself – this will tell you whether macro conditions remain friendly, that this latest move is simply a pause that refreshes the uptrend, or whether the big-picture environment is turning against the stock.
International top 10
Company | Macro Relevance | Model Value | Fair Value Gap |
70% | € 66.46 | -7.54% | |
82% | $277.64 | -4.34% | |
87% | $24.85 | -1.92% | |
77% | $29.59 | -1.73% | |
75% | $62.93 | -1.71% | |
70% | $28.05 | 2.09% | |
72% | $103.08 | 4.12% | |
67% | $170.01 | 4.24% | |
70% | € 154.27 | 5.47% | |
71% | $153.64 | 6.52% |
Source: eyeQ. Long Term tactical models. Data correct as at 29 September 2024.
Micron Technology
Micron Technology Inc (NASDAQ:MU) reported strong earnings last week with revenues nearly doubling year-over-year. Robust AI demand fuelled the surge in its data centre DRAM products and industry-leading HMB chips.
The stock shot up by 14% following the better-than-expected update and, in doing so, closed the eyeQ Valuation Gap. The stock’s price has been cheap to macro conditions for several months but, after this rally, now sits slightly (4.12%) above where the big picture stuff says it should be.
That means going forward it will be critical to watch what eyeQ model value does next. Having spent most of 2024 rising, model value has fallen in the last two months. Relative to its mid-July high, macro conditions have deteriorated nearly 30%. We need to see this stabilise before we turn constructive on the stock.
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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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