eyeQ: 10 actionable trading signals for week beginning 5 Feb 2024
interactive investor has teamed up with experts at eyeQ whose artificial intelligence and own smart machine generate actionable trading signals. Here, they name 10 UK shares and 10 overseas stocks trading out of sync with macro conditions.
6th February 2024 10:21
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 new 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, singe 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.
Short Term model
The Short Term model looks at share prices over the last four months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates model value, model relevance and Fair Value Gap.
UK Top 10 | |||
Company name | Macro Relevance | Model Value | Fair Value Gap |
70% | 562.16p | -9.1% | |
74% | 258.04p | -4.9% | |
68% | 112.67p | -2.4% | |
71% | 42.98p | -1.7% | |
84% | 508.76p | -1.1% | |
72% | 1,621.74p | 2.6% | |
87% | 2,424.67p | 2.9% | |
83% | 945.95p | 3.3% | |
86% | 459.22p | 3.7% | |
94% | 537.65p | 5.1% | |
Source: eyeQ. Data correct as at 6 February 2024. These are short-term tactical ideas.
Ocado
A post-Christmas hangover, wet weather, weaker job market, high interest rates – these are the most commonly quoted issues weighing on British shoppers and therefore retail stocks.
eyeQ’s smart machine calculates where a stock “should” trade given overall macro conditions including things like the level of economic growth and inflation. On our measure, the sell-off in Ocado shares has overshot macro fundamentals.
International Top 10 | |||
Model Name | Macro Relevance | Model Value | Fair Value Gap |
81% | $22.67 | -36.3% | |
84% | $158.61 | -35.2% | |
75% | $10.49 | -35.1% | |
71% | $13.53 | -30.9% | |
67% | $8.29 | -9.4% | |
80% | $396.69 | 2.2% | |
91% | $60.09 | 2.4% | |
89% | $169.57 | 2.7% | |
80% | $157.38 | 7.6% | |
67% | $456.04 | 31.3% | |
Source: eyeQ. Data correct as at 6 February 2024. These are short-term tactical ideas.
Marathon Digital Holdings
The launch of a spot-tracking exchange-traded fund (ETF) in 2004 is often cited as a key catalyst for the 350% rally in gold over the next seven years. Hope is that the launch of bitcoin ETFs will do the same for the crypto market – suck in retail buyers and fuel a strong rally.
Before the ETFs, one way that investors could get exposure to bitcoin was via crypto mining stocks like Marathon. So, does this mean that those mining stocks will suffer now that investors are flocking to the ETFs instead?
That explains the sell-off in Marathon Digital since December. But that now leaves Marathon looking 29.5% cheap to overall macro conditions.
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.
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