eyeQ: China and two massive UK stocks that screen as cheap
A lot of bad news is already in the price of these two stocks, and risk-reward may be changing, which could represent a good opportunity for believers in a soft economic landing.
23rd February 2024 10:33
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
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HSBC
Trading signal: strategic long-term model
Macro Relevance: 23%
Model Value: 624.13p
Fair Value Gap (premium/discount to Model Value): 5.6%
Standard Chartered
Trading signal: strategic long-term model
Macro Relevance: 58%
Model Value: 648.90p
Fair Value Gap (premium/discount to Model Value): +1.03%
BHP
Trading signal: strategic long-term model
Macro Relevance: 70%
Model Value: 2,472.36p
Fair Value Gap (premium/discount to Model Value): -7.1%
Rio Tinto
Trading signal: strategic long-term model
Macro Relevance: 80%
Model Value: 5,545.72p
Fair Value Gap (premium/discount to Model Value): -6.77%
Here are some definitions of useful terms used in this video:
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.
The transcript for this video is available in the description on YouTube here.
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