eyeQ: 10 actionable trading signals for week beginning 9 December 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.
9th December 2024 09:54
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 |
| GSK (LSE:GSK) | 78% | 1542.35p | -14.76% |
| Wetherspoon (J D) (LSE:JDW) | 77% | 698.59p | -13.32% |
| PageGroup (LSE:PAGE) | 75% | 388.25p | -8.57% |
| Johnson Matthey (LSE:JMAT) | 73% | 1473.12p | -6.21% |
| Howden Joinery Group (LSE:HWDN) | 82% | 894.14p | -5.94% |
| BP (LSE:BP.) | 82% | 374.76p | 0.79% |
| FirstGroup (LSE:FGP) | 65% | 152.62p | 1.15% |
| IMI (LSE:IMI) | 76% | 1799.51p | 1.99% |
| Legal & General Group (LSE:LGEN) | 77% | 229.67p | 3.30% |
| ITV (LSE:ITV) | 65% | 68.37p | 7.04% |
Source: eyeQ. Long Term tactical models. Data correct as at 6 December 2024.
Johnson Matthey
Johnson Matthey (LSE:JMAT) focuses on sustainable technologies which could provide growth opportunities amid shifts toward green and clean energy. On the flip side, it is potentially vulnerable to President Trump's threat of tariffs.
In its latest earnings report, the firm missed expectations and the stock suffered a sharp fall.
But while company news has been the dominant story of late, note eyeQ’s macro relevance score has surged by 21% in the last two weeks. JMAT is back in a macro regime, meaning investors need to consider the big picture environment too.
Over the last two months, the macro trend has been lower - eyeQ model value is down 18.9% since September.
But the latest sell-off has moved still lower and the stock now sits 6.21% cheap to eyeQ model value. That's not quite enough of a Valuation Gap to trigger a bullish signal. Bulls would also want to see model value bottom & ideally turn higher too.
Still a fair amount of bad news is in the price and this is definitely one to add to your watchlist.
International Top 10
| Company | Macro Relevance | Model Value | Fair Value Gap |
| Honda Motor Co Ltd ADR (NYSE:HMC) | 71% | $29.55 | -13.48% |
| Macy's Inc (NYSE:M) | 74% | $17.44 | -6.16% |
| Sirius XM Holdings Inc (NASDAQ:SIRI) | 69% | $29.45 | -4.02% |
| Okta Inc Class A (NASDAQ:OKTA) | 67% | $87.60 | -3.31% |
| American International Group Inc (NYSE:AIG) | 72% | $77.45 | -2.51% |
| Costco Wholesale Corp (NASDAQ:COST) | 71% | $989.96 | 0.57% |
| Microsoft Corp (NASDAQ:MSFT) | 71% | $437.16 | 1.45% |
| Amazon.com Inc (NASDAQ:AMZN) | 70% | $210.30 | 7.37% |
| SoFi Technologies Inc Ordinary Shares (NASDAQ:SOFI) | 66% | $14.16 | 11.59% |
| Tesla Inc (NASDAQ:TSLA) | 66% | $285.42 | 26.67% |
Source: eyeQ. Long Term tactical models. Data correct as at 6 December 2024.
Mag 7
Three of the Magnificent 7 stocks feature in this week's international top 10. Tesla Inc (NASDAQ:TSLA), Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) all sit rich to macro conditions. Amazon and Microsoft do have decent macro momentum - eyeQ model value is trending higher, it's just that the stock price has run ahead of big-picture fundamentals like growth and inflation. Put another way, the story is positive; it's just that these aren't great entry levels.
Tesla looks different. After moving higher over November, eyeQ model value has stalled. The stock price continues to accelerate, but the last leg of this rally has not been accompanied by improving macro conditions. It may well be that the positive impact from Elon Musk's appointment to Trump's administration can keep fuelling the rally. But macro is important too - a macro relevance score of 66% means the stock is back in regime for the first time since June. And from a purely macro perspective, the risk-reward doesn't look great here.
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.