eyeQ: 10 actionable trading signals for week beginning 17 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.
17th June 2024 11:12
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 |
| easyJet (LSE:EZJ) | 70% | 500.69p | -11.89% |
| BP (LSE:BP.) | 66% | 501.32p | -8.98% |
| Wetherspoon (J D) (LSE:JDW) | 68% | 766.52p | -5.65% |
| Grainger (LSE:GRI) | 69% | 250.29p | -5.16% |
| Ninety One Ordinary Shares (LSE:N91) | 73% | 167.81p | -4.16% |
| Savills (LSE:SVS) | 76% | 1070.02p | 3.60% |
| Tate & Lyle (LSE:TATE) | 66% | 627.00p | 6.97% |
| IG Group Holdings (LSE:IGG) | 75% | 736.47p | 7.25% |
| Experian (LSE:EXPN) | 82% | 3404.26p | 8.17% |
| Halma (LSE:HLMA) | 87% | 2213.34p | 16.32% |
Source: eyeQ. Long Term tactical models. Data correct as at 17 June 2024
Tate & Lyle
The British food and beverage company Tate & Lyle (LSE:TATE) posted decent earnings at the end of May. That prompted a strong (6.5%) rally. Unfortunately, that momentum didn’t last, with the stock giving away all those gains over the next few weeks.
There may be more to come. On eyeQ, macro conditions have deteriorated recently, with model value down 2.78% in the last month. A big part of that comes from the jitters around the French election. Our measure of stress in European bond markets is the top driver of Tate right now, so this week’s video "These stories will impact your investment portfolio" explaining how market nerves are impacting share prices, is an important watch.
Tate itself has not reacted to the decline in macro conditions, and that leaves it 6.97% rich on eyeQ, with our smart machine firing a bearish signal. From a purely macro perspective, this is not a great time to stay invested in the company.
International Top 10 | |||
| Company | Macro Relevance | Model Value | Fair Value Gap |
| Vinci SA (EURONEXT:DG) | 80% | € 112.08 | -14.20% |
| Capital One Financial Corp (NYSE:COF) | 88% | $146.79 | -9.79% |
| Target Corp (NYSE:TGT) | 91% | $151.54 | -7.25% |
| Tesla Inc (NASDAQ:TSLA) | 81% | $186.76 | -4.92% |
| Citigroup Inc (NYSE:C) | 0% | $61.12 | -3.02% |
| Alibaba Group Holding Ltd ADR (NYSE:BABA) | 68% | $72.04 | 1.79% |
| TKO Group Holdings Inc (NYSE:TKO) | 69% | € 20.07 | 5.35% |
| RTX Corp (NYSE:RTX) | 72% | $91.92 | 11.81% |
| On Holding AG (NYSE:ONON) | 71% | $34.74 | 17.29% |
| Bombardier Inc Registered Shs -B- Subord Vtg (TSE:BBD.B) | 71% | C$63.30 | 24.86% |
Source: eyeQ. Long Term tactical models. Data correct as at 17 June 2024
Target
Away from AI and the biggest technology names, there are growing fears that the US economy is starting to slow. This week’s retail sales report will provide critical information on that but, anecdotally, earnings from big retailers like Target Corp (NYSE:TGT) have been telling. Target missed its Q1 earnings forecasts, which its executives blamed on the strain inflation is exerting on consumers’ wallets.
On eyeQ, Target’s macro relevance score is 91%. Big picture stuff like the Federal Reserve is absolutely critical for the share price right now. Model value has been grinding lower for several weeks now. The consolation is that the market has moved ahead of that, with the recent sell-off taking Target 7.35% below where macro conditions say the stock “should” trade.
That fair value gap isn’t big enough yet for the machine to trigger a bullish signal. But Target is a good indicator of the health of the US consumer, so this is a good barometer to watch for equity markets more broadly.
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).
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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.
Please note that our article on this investment should not be considered to be a regular publication.
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