eyeQ: 10 actionable trading signals for week beginning 6 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.
6th January 2025 09:20
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 | Macro Relevance | Model Value | Fair Value Gap |
72% | 347.72p | -14.76% | |
66% | 148.61p | -13.96% | |
75% | 1449.14p | -10.45% | |
81% | 368.31p | -8.58% | |
79% | 840.95p | -7.40% | |
78% | 226.61p | 1.04% | |
80% | 1799.07p | 1.20% | |
84% | 399.55p | 2.06% | |
67% | 4576.68p | 6.00% | |
79% | 82.13p | 17.62% |
Source: eyeQ. Long Term tactical models. Data correct as at 3 January 2025
Page Group
The UK recruiter's stock price continues to languish near recent lows. Fears around slower economic growth and a moribund labour market in particular are weighing.
It's very early days but eyeQ model value has actually bounced in the first week of the new year. Given overall macro conditions, the smart machine says PageGroup (LSE:PAGE) should be trading around 368.31p. That means the stock currently sits at an 8.58% discount.
It's been cheaper, but this is towards the bottom end of our valuation gap ranges. Prudence says wait to see if this improvement in the macro environment continues. One week doesn't make a trend. But, if it does, we could be seeing an opportunity develop.
International Top 10
Company | Macro Relevance | Model Value | Fair Value Gap |
67% | $17.10 | -15.25% | |
67% | $73.14 | -14.14% | |
66% | $437.01 | -3.23% | |
71% | $228.76 | -2.04% | |
69% | $72.24 | -1.74% | |
66% | $90.29 | 2.03% | |
70% | € 600.02 | 4.47% | |
65% | $41.75 | 7.12% | |
73% | $393.63 | 4.10% | |
65% | $11.25 | 8.82% |
Source: eyeQ. Long Term tactical models. Data correct as at 3 January 2025
Microsoft
eyeQ shows our valuation gaps in percentage terms. So, in the case of Microsoft Corp (NASDAQ:MSFT) it currently sits 3.23% below our model value. But the smart machine looks at these gaps in standard deviation terms - put simply, how far the stock price is from its average level.
The beauty of this approach is it means we're adjusting every stock for volatility. A high volatility stock might be 10% or even 20% cheap to its average on eyeQ, but if it's moving around a lot, that deviation is less significant than it sounds. In the case of Microsoft, that 3.23% gap is almost at one standard deviation, and that's the threshold for a signal on eyeQ.
So, we're close to a bullish signal on this tech giant which remains a popular way to get exposure to the AI trade. Watch this space.
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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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