eyeQ: 10 actionable trading signals for week beginning 10 June 2024
interactive investor has teamed up with experts at eyeQ whose AI and own smart machine generate actionable trading signals. Here, they highlight 10 UK shares and 10 overseas stocks either cheap or expensive given current macro conditions.
10th June 2024 11:43
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 |
70% | 526.96p | -13.79% | |
73% | 498.49p | -7.74% | |
70% | 251.90p | -3.03% | |
72% | 79.98p | -2.40% | |
67% | 773.85p | -1.69% | |
78% | 35.15p | 4.09% | |
87% | 459.27p | 4.22% | |
81% | 238.43p | 4.28% | |
74% | 247.17p | 5.63% | |
83% | 73.00p | 7.65% | |
Source: eyeQ. Long Term tactical models. Data correct as at 10 June 2024
Grainger (GRI)
Getting Britain building again. This is the Labour pledge if it wins the election.
For investors, this implies a Labour government could spark renewed energy into the housing sector.
On eyeQ, a lot of homebuilders look rich to macro conditions at the moment, but Grainger (LSE:GRI) – a company that owns and develops residential housing – looks interesting.
The stock sold off in May and is near the lows for 2024.
Our smart machine shows the share price sits 3.03% cheap to overall macro conditions which haven’t done much since mid-May. eyeQ model value has largely flatlined.
That’s not a big Valuation Gap but, unlike several of its peers which are rich to big picture stuff such as growth and inflation, it is slightly cheap.
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
75% | $301.83 | -24.80% | |
76% | $183.46 | -9.28% | |
81% | $191.07 | -7.66% | |
72% | € 69.85 | -7.28% | |
75% | € 52.33 | -2.17% | |
69% | € 56.25 | 2.69% | |
66% | $960.60 | 5.92% | |
75% | $183.96 | 6.57% | |
80% | $61.48 | 8.64% | |
68% | $26.42 | 9.91% | |
Source: eyeQ. Long Term tactical models. Data correct as at 10 June 2024
JD.com (JD)
The Chinese economy and consumer are still wounded.
However, the latest economic data and company earnings showed that it’s not the same across the whole economy. While e-commerce is doing well, the rest of the economy is still sluggish, suggesting a mixed macroeconomic picture.
JD.com Inc ADR (NASDAQ:JD) is fighting to gain back market share it lost to Temu’s parent company (Pinduoduo). It’s now focusing on high-end products and customer experience. In addition, the e-commerce behemoth is targeting the US consumer.
But what about eyeQ? Well, the picture doesn’t look so bright. The stock currently sits 9.91% above where macro conditions say they “should” be, and there are early signs that the model is rolling over.
In addition, the stock is back in regime which means one thing: pay attention to macro.
The budget-conscious Chinese consumer and macroeconomic headwinds leaves you to believe that this is not the best entry level for JD at the moment.
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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