eyeQ: 10 actionable trading signals for week beginning 26 August 2024
Experts at eyeQ use AI and their own smart machine to generate actionable trading signals. Here, they highlight 10 UK shares and 10 overseas stocks either cheap or expensive given current macro conditions.
27th August 2024 11:07
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
- 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) | 73% | 508.20p | -13.46% |
| InterContinental Hotels Group (LSE:IHG) | 67% | 8258.32p | -9.82% |
| Savills (LSE:SVS) | 80% | 1276.29p | -6.89% |
| Experian (LSE:EXPN) | 83% | 3796.51p | -4.30% |
| Legal & General Group (LSE:LGEN) | 79% | 235.29p | -4.07% |
| Greggs (LSE:GRG) | 86% | 3104.80p | 2.24% |
| Big Yellow Group (LSE:BYG) | 73% | 1255.34p | 2.84% |
| Essentra (LSE:ESNT) | 66% | 170.59p | 3.62% |
| Drax Group (LSE:DRX) | 83% | 628.71p | 4.52% |
| Playtech (LSE:PTEC) | 75% | 558.40p | 14.36% |
Source: eyeQ. Long Term tactical models. Data correct as at 26 August 2024.
Experian
Many of us are familiar with the company when applying for financing to buy a car or a house. Its technology is used by financial institutions to track credit, manage financial data and protect against identity theft.
On eyeQ, the firm’s model relevance score is 83% meaning big-picture stuff cannot be ignored. And right now, it’s financial conditions and risk appetite that matter. The bounce in both since the early August “flash crash” has lifted eyeQ model value by nearly 10%.
The stock has lagged that improvement and sits 4.30% cheap to overall macro conditions. That’s very much the cheap end of recent valuation gap ranges but isn’t quite enough for the machine to fire a signal. Yet. Experian goes on the “one to watch” list.
International top 10
| Company | Macro Relevance | Model Value | Fair Value Gap |
| Dell Technologies (NYSE:DELL) | 73% | $129.01 | -15.98% |
| Citigroup Inc (NYSE:C) | 87% | $69.37 | -12.24% |
| Amazon.com Inc (NASDAQ:AMZN) | 69% | $188.84 | -7.51% |
| Salesforce Inc (NYSE:CRM) | 67% | $284.62 | -7.25% |
| Agilent Technologies Inc (NYSE:A) | 79% | $145.79 | -3.51% |
| Electronic Arts Inc (NASDAQ:EA) | 69% | $147.57 | 1.09% |
| Coca-Cola Consolidated Inc (NASDAQ:COKE) | 75% | $1324.14 | 1.50% |
| eBay Inc (NASDAQ:EBAY) | 79% | $57.92 | 2.19% |
| State Street Corporation (NYSE:STT) | 69% | $82.40 | 2.61% |
| PayPal Holdings Inc (NASDAQ:PYPL) | 68% | $65.21 | 9.61% |
Source: eyeQ. Long Term tactical models. Data correct as at 26 August 2024.
Salesforce
The software company is a market leader in Customer Relationship Management (CRM) technology and it’s due to report earnings this week. That means investors will be focused on company-specific news.
But Salesforce has a macro relevance score of 6% on eyeQ. Macro matters too. And the stock has lagged in the August recovery. Since 5 Aug, eyeQ model value is up 50%!
CRM has bounced but lagged that move and, as a result, sits 7.25% cheap to model. That triggered a bullish signal, with the machine flagging it as a stock that has more catching up to do.
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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.
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