eyeQ: 10 actionable trading signals for week beginning 24 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.
24th June 2024 11:21
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 |
72% | 495.47p | -10.38% | |
68% | 250.39p | -5.17% | |
68% | 722.40p | -4.10% | |
79% | 234.34p | -1.40% | |
87% | 167.81p | -1.21% | |
78% | 1066.44p | 3.92% | |
84% | 2733.95p | 3.80% | |
86% | 436.56p | 4.16% | |
71% | 51.76p | 6.84% | |
68% | 11496.61p | 7.82% | |
Source: eyeQ. Long Term tactical models. Data correct as at 24 June 2024
Lloyds (LLOY)
Lloyds Banking Group (LSE:LLOY) had a great run between February and May, with the stock rising around 40%. But, in the last month, that upward momentum has stalled.
From a macro perspective a big driver of the 2024 rally has been that bond markets have been well behaved. When bond markets are volatile that’s a big headwind for the stock.
The fall-out from the French elections that’s hurting the government bond market over there, shouldn’t directly impact the UK gilt market or Lloyds Bank. But it may be one reason why investors have started to become a little more nervous. Memories of the Truss budget in 2022 are still a little raw!
On eyeQ, model value (where our smart machine says the stock should be priced) has fallen 4% over June. Lloyds’ share price has moved sideways which means it now sits 6.8% rich to overall macro conditions. That’s not yet rich enough to trigger an official bearish signal, but it’s not a stock that looks attractive to us right now.
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
65% | $42.19 | -17.02% | |
77% | $175.79 | -9.03% | |
70% | $198.46 | -8.44% | |
79% | € 120.41 | -7.22% | |
75% | $28.14 | -1.86% | |
80% | $59.95 | 1.08% | |
69% | $17.63 | 2.40% | |
76% | $64.48 | 3.88% | |
81% | $91.33 | 5.03% | |
83% | $41.62 | 12.78% | |
Source: eyeQ. Long Term tactical models. Data correct as at 24 June 2024
General Mills (GIS)
General Mills Inc (NYSE:GIS) reports its latest quarterly earnings on Wednesday. The package food company is a good example of a consumer staple stock and, as such, it can be seen as an indicator of the health of the US consumer.
On eyeQ, model value has fallen 3.88% over the last month; i.e. macro conditions have been getting worse. And while the stock price has fallen, it hasn’t kept up with that decline in the macro environment. The result is it sits nearly 4% rich on our models.
That’s just shy of the level that would generate a bearish signal. Any bad news from Wednesday’s earnings could be the catalyst that sparks the bears into life.
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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