Interactive Investor

eyeQ: 10 actionable trading signals for week beginning 19 Feb 2024

interactive investor has teamed up with experts at eyeQ whose artificial intelligence and own smart machine generate actionable trading signals. Here, they name 10 UK shares and 10 overseas stocks trading out of sync with macro conditions.

19th February 2024 13:32

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

This new 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, 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.

Short Term model

This model looks at share prices over the last four 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. It’s what we call a tactical opportunity.

UK top 10

Company

Macro Relevance

Model Value

Fair Value Gap

Persimmon (LSE:PSN)

82%

1,474.06p

-3.66%

Marks & Spencer Group (LSE:MKS)

78%

243.58p

-2.78%

Entain (LSE:ENT)

77%

954.68p

-2.28%

Legal & General Group (LSE:LGEN)

85%

244.99p

-1.99%

National Grid (LSE:NG.)

73%

1,028.14p

-1.19%

Shell (LSE:SHEL)

80%

2,425.12p

2.88%

Glencore (LSE:GLEN)

68%

381.89p

4.42%

Lloyds Banking Group (LSE:LLOY)

74%

40.98p

5.13%

NatWest Group (LSE:NWG)

88%

216.02p

5.87%

JD Sports Fashion (LSE:JD.)

73%

94.85p

15.39%

Source: eyeQ. Short Term tactical models. Data correct as at 19 February 2024

Legal & General

Legal & General Group (LSE:LGEN) has a great record when it comes to paying dividends and, as such, is a mainstay in many retail investors' portfolios.

Now we can also add that it screens as slightly cheap to macro conditions. The Fair Value Gap is modest at almost 2% but does present a nice entry level for those looking to gain exposure.

Macro model value is flatlining, awaiting a new clear direction. Ideally, we'd see macro conditions turn higher for a more definitive bullish signal. But, even without that, there is a tactical opportunity here given February's sell-off has taken the stock below where macro conditions say it 'should' trade.

International top 10

Company

Macro Relevance

Model Value

Fair Value Gap

NVIDIA Corp (NASDAQ:NVDA)

67%

$818.73

-12.75%

Upstart Holdings Inc Ordinary Shares (NASDAQ:UPST)

75%

$29.23

-11.61%

Advanced Micro Devices Inc (NASDAQ:AMD)

79%

$185.26

-6.55%

PayPal Holdings Inc (NASDAQ:PYPL)

85%

$61.14

-3.38%

Apple Inc (NASDAQ:AAPL)

82%

$186.66

-2.39%

Berkshire Hathaway Inc Class B (NYSE:BRK.B)

82%

$414.72

-2.15%

Novo Nordisk

77%

€ 866.11

-1.79%

Tesla Inc (NASDAQ:TSLA)

80%

$168.47

15.74%

Marathon Digital Holdings Inc (NASDAQ:MARA)

65%

$19.88

26.19%

Coinbase Global Inc Ordinary Shares - Class A (NASDAQ:COIN)

83%

$127.08

29.52%

Source: eyeQ. Short Term tactical models. Data correct as at 19 February 2024.

Apple

Apple Inc (NASDAQ:AAPL) is back in the news with reports their ProVision headsets are being returned in large numbers. For the bears, this bad news can be added to the story about Warren Buffett reducing his exposure and fears that the company is too exposed to China.

For years Apple has led the US equity market, but quietly it has lost some of its shine. The stock has underperformed the rest of the US technology sector by 18% over the last year and the S&P 500 index by 14% in the last two months alone.

These stories are driven by company news and political developments but note eyeQ’s Apple model has an 82% confidence number – so, macro is important too.

Model value is moving sideways at the moment – there isn’t a clear uptrend or downtrend in macro conditions. But the recent share price fall has taken it slightly (2.4%) below where overall macro conditions say it should be.

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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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.