Top ASX Stocks to Watch

It has been a remarkable rally in the ASX with the index breaking above 5600 intraday yesterday.

bg_australia 02
Source: Bloomberg

But sentiment is quite clearly starting to turn. It seems increasingly unlikely that the ASX is going to hit 5710 on this run up. Pullbacks are an inevitability in markets, and the bigger question is where the ASX may find support on a pullback. The main levels of technical support are around 5500 and 5400, but in the past two upwaves of the ASX the pullbacks have both roughly been about 300 points.

Angus_chart_020816_small
Click to enlarge

Forward P/E Ratio

Unsurprisingly, the forward price-to-earnings ratio on the ASX has been climbing again and has now reached 17.1. I suppose what is notable is given the immense post-Brexit rally that the forward P/E ratio is still lower than its peak in late-May.

Index Internals

The percentage of companies trading above a Relative Strength Index (RSI) value of 70 has hit 24.5%. RSI’s above 70 can imply that a stock is starting to become overbought and primed for a reversal. And it’s notable that this level has not been seen since March 2015.

 

Top 15 Winners and Losers

Programmed Maintenance has surged over the past week after it confirmed it was on track to achieve its FY 2017 EBITDA forecast of A$100-$110 million. Investors continue to pile into the relatively cheaply valued Monadelphous despite the analyst community still being very unexcited about its near-term prospects. Beach Energy has been battered by the by the collapse in the oil price.

NAME

5 Day

1 Month

YTD

NAME

5 Day

1 month

YTD

PROGRAMMED MAINT

17.9

22.2

-12.6

WORLEYPARSONS

-3.1

-1.3

63.9

MONADELPHOUS GRP

15.5

40.8

73.6

SYRAH RESOURCES

-3.1

-26.9

19.0

REGIS RESOURCES

13.6

24.8

78.8

TRADE ME GROUP L

-3.2

9.2

26.5

NORTHERN STAR RE

12.3

13.9

92.5

GREENCROSS LTD

-3.4

0.1

5.8

SARACEN MIN HLDG

11.8

25.1

194.3

SANTOS LTD

-3.9

-4.5

24.0

HENDERSON-CDI

10.7

-17.7

-32.4

TREASURY WINE ES

-3.9

-3.8

16.4

FORTESCUE METALS

10.4

33.0

142.2

G8 EDUCATION LTD

-4.0

-3.6

9.8

VIRTUS HEALTH LT

8.4

14.8

23.2

ORIGIN ENERGY

-4.0

-2.6

24.1

NEWCREST MINING

8.2

15.9

95.3

AUSTRALIAN AGRIC

-4.7

8.9

50.2

ARISTOCRAT LEISU

7.9

19.6

57.9

MANTRA GROUP LTD

-4.8

4.7

-28.4

AUSTAL LTD

7.7

-2.9

-19.3

SAI GLOBAL LTD

-5.3

-1.1

-12.8

WESTERN AREAS LT

7.6

24.1

26.3

SEVEN WEST MEDIA

-5.5

-10.8

38.7

EVOLUTION MINING

7.0

26.2

109.1

ACONEX LTD

-6.0

13.8

54.2

CYBG PLC -CDI

6.9

-15.9

#N/A N/A

ASALEO CARE LTD

-6.7

-35.1

-9.4

ORICA LTD

6.5

8.9

-6.2

BEACH ENERGY LTD

-7.3

-13.6

16.3

 

Sectors

Materials have surged back into focus, helped in no small part by the pullback in the US dollar after disappointing US 2Q GDP. But consumer discretionary stocks have also added 2% over the past week. Healthcare and IT stocks have not fared well, likely partly seeing their overseas earnings impacted by the rally in the Aussie dollar up to US$0.76 over the past week. And no surprise that the energy sector has been hit alongside the big drop in the spot price.

Sector

5 day

1 Month Return

YTD Return

IT

-1.0

2.1

-2.5

Utilities

0.7

6.7

16.8

Healthcare

-1.0

6.7

14.6

Industrials

1.2

7.1

14.9

Financials

1.3

6.6

-2.2

Consumer Staples

-0.3

8.7

1.0

Telecoms

-1.1

3.1

4.5

Materials

2.9

6.5

24.2

Consumer Disc.

2.0

9.0

12.6

Energy

-1.1

2.7

5.6

ASX Index

1.0

6.5

5.5

 

Factors

Small sized companies definitely seem to be one the best performing factors of the past week and the past month.

Factor

5 day

1 Month Return

YTD Return

Value

2.5

7.6

9.7

Risk Weighted

2.5

7.8

17.2

ESG

2.6

7.8

7.1

Momentum

2.7

7.3

24.1

Quality

1.5

8.1

15.5

High Yield

1.7

5.3

6.0

Minimum Volatility

2.3

7.8

16.4

Small Caps

3.1

9.0

22.4

Infrastructure

2.2

7.6

20.7

MSCI Australia

2.3

7.5

10.9

 

Short Interest

National Storage REIT and Graincorp have both seen dramatic increases in short positions over the past week. Graincorp has also shot up to be the fifth most shorted stock in the index in short interest ratio terms.

Name

Short Interest Ratio

Week on Week % Increase in Short Positions

NATIONAL STORAGE

6.9

301.9

GRAINCORP LTD-A

30.8

80.9

IPH LTD

2.7

39.2

GATEWAY LIFESTYL

6.5

24.3

CIMIC GROUP LTD

2.3

10.0

AUSTAL LTD

4.6

9.7

G8 EDUCATION LTD

3.7

9.6

COCA-COLA AMATIL

3.3

9.3

PERPETUAL LTD

19.4

7.4

ADELAIDE BRI LTD

3.5

6.8

 

Consensus Price Targets

Monadelphous is now trading at a whopping 72.9% above its consensus price target, but some of the analysts have not updated their price target on the stock for a number of months. No surprise the crazy run of gains seen by Whitehaven coal has also lifted them to 26.2% above their consensus price target.

Stock Ticker

Name

Percentage Above Consensus Target Price

MND AU

MONADELPHOUS GRP

72.9

BWP AU

BWP TRUST

32.3

WHC AU

WHITEHAVEN COAL

26.2

RRL AU

REGIS RESOURCES

26.0

SPK NZ

SPARK NEW ZEALAN

25.3

FMG AU

FORTESCUE METALS

23.6

NVT AU

NAVITAS LTD

22.1

SAR AU

SARACEN MIN HLDG

22.1

SHV AU

SELECT HARVESTS

22.1

SVW AU

SEVEN GROUP HOLD

22.0

 

Momentum Stock Picks

Note: These momentum stock recommendations are based off backtested results looking at a 3-5 day holding period with a 5% stop loss on every trade.

VRT – (Buy)

Virtus Health has broken through resistance at A$7.30 and looks like it has plenty of momentum behind it to break though A$8.00. Sentiment about the IVF space certainly appears to be turning up heading into earnings season.

RMD – (Buy)

ResMed has had a massive jump over the past week, and here looks to be a lot of momentum behind the stock coming into earnings season.

MND – (Buy)

Monadelphous continues to confound analyst expectations, but if Whitehaven is anything to go by this could proceed for quite a while. Its move into the clean energy space has been welcomed by investors. And a number of investors may be looking at its 2014 price levels and thinking that there could be a lot more value left in the stock.

Denna information har sammanställts av IG, ett handelsnamn för IG Markets Limited. Utöver friskrivningen nedan innehåller materialet på denna sida inte ett fastställande av våra handelspriser, eller ett erbjudande om en transaktion i ett finansiellt instrument. IG accepterar inget ansvar för eventuella åtgärder som görs eller inte görs baserat på detta material eller för de följder detta kan få. Inga garantier ges för riktigheten eller fullständigheten av denna information. Någon person som agerar på informationen gör det således på egen risk. Materialet tar inte hänsyn till specifika placeringsmål, ekonomiska situationer och behov av någon specifik person som får ta del av detta. Det har inte upprättats i enlighet med rättsliga krav som ställs för att främja oberoende investeringsanalyser utan skall betraktas som marknadsföringsmaterial.