Interactive Investor

eyeQ: 10 actionable trading signals for week beginning 20 May 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.

20th May 2024 10:39

by Huw Roberts from eyeQ

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"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 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

Indivior Ordinary Share (LSE:INDV)

67%

1667.18p

-24.70%

easyJet (LSE:EZJ)

76%

585.40p

-19.27%

Halma (LSE:HLMA)

85%

2359.44p

-1.13%

Greggs (LSE:GRG)

84%

2859.76p

-1.05%

Games Workshop Group (LSE:GAW)

78%

9967.40p

-0.83%

Lloyds Banking Group (LSE:LLOY)

73%

53.86p

2.99%

Legal & General Group (LSE:LGEN)

84%

238.20p

5.78%

Kingfisher (LSE:KGF)

69%

243.41p

6.60%

Imperial Brands (LSE:IMB)

69%

1760.14p

10.45%

Persimmon (LSE:PSN)

90%

1260.21p

14.30%

Source: eyeQ. Long Term tactical models. Data correct as at 20 May 2024.

Games Workshop

It’s that time again when investors wait for UK inflation data for an indication of the date of a first interest rate cut and whether there is wriggle room for a second 25 basis-point cut before the end of 2024.

For investors, it is critical to understand which shares are the most vulnerable to inflation and interest rates. This is why we flag Games Workshop Group (LSE:GAW).

On eyeQ, GAW likes rising inflation and currently screens as 0.83% cheap to macro conditions, making a nice candidate for a defensive play if Wednesday’s inflation print comes in hotter than expected.

Currently, the fair value gap (the difference between the actual asset price and eyeQ’s model value) is too small to fire a signal, and the model hasn’t done much in the last four weeks.

As it stands, the eyeQ smart machine is telling us to wait for Wednesday's CPI report before making any decisions on an investment in Games Workshop.

International Top 10

Company

Macro Relevance

Model Value

Fair Value Gap

Advanced Micro Devices Inc (NASDAQ:AMD)

69%

$187.86

-14.22%

SoFi Technologies Inc Ordinary Shares (NASDAQ:SOFI)

70%

$8.16

-12.10%

Tesla Inc (NASDAQ:TSLA)

77%

$188.68

-6.32%

Sprinklr Inc Class A (NYSE:CXM)

75%

$13.21

-5.60%

BlackRock Inc (NYSE:BLK)

91%

$824.86

-1.56%

PayPal Holdings Inc (NASDAQ:PYPL)

80%

$62.77

2.65%

Dole (NYSE:DOLE)

70%

$12.25

4.53%

Apple Inc (NASDAQ:AAPL)

81%

$179.91

5.25%

Anheuser-Busch InBev SA/NV ADR (NYSE:BUD)

79%

$60.78

9.85%

Alibaba Group Holding Ltd ADR (NYSE:BABA)

66%

$77.73

12.21%

Source: eyeQ. Long Term tactical models. Data correct as at 20 May 2024.

BUD

As Luke Combs says: Beer never broke my heart.

That’s something the executives of AnBev can say after the company managed to stage a comeback from the Budweiser marketing fiasco. There is still an ongoing Bud Light boycott in the US, but the hope will be that by sponsoring Team USA in the upcoming Paris Olympics, Anheuser-Busch InBev SA/NV ADR (NYSE:BUD) can turn its recent image issues around.

From a financial perspective, the company posted strong Q1 performance which has prompted a sharp share price rally. The stock is up around 14% in May. Macro conditions have also improved, but not to the same degree. That leaves BUD 9.85% rich to the big picture stuff like growth and inflation.

The bottom line is that a lot of good news is in the price now and it would be better to wait for a price drop before adding BUD to your portfolio.

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.

ii adheres to a strict code of conduct.  Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.

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.

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