eyeQ: 10 actionable trading signals for week beginning 29 April 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.
29th April 2024 11:27
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 |
74% | 1794.42p | -27.44% | |
76% | 1257.57 | -12.28% | |
77% | 9996.87p | -4.13% | |
69% | 1791.83p | 2.62% | |
80% | 2739.35p | -1.46% | |
70% | 1030.32p | 3.17% | |
68% | 2766.18p | 4.73% | |
76% | 1691.32p | 6.64% | |
92% | 1155.32p | 12.34% | |
81% | 48.82p | 17.25% | |
Source: eyeQ. Long Term tactical models. Data correct as at 29 April 2024.
Savills (SVS)
Savills (LSE:SVS) may not have the largest market cap on the London Stock Exchange but, in the last six months, its share price grew by an astonishing 39%.
Why? Falling inflation and hopes of Bank of England (BoE) rate cuts have fuelled green shoots of recovery for the UK property market. But that story has shifted more recently and, right now, sticky inflation and a delay in cutting rates are prompting a possible re-think.
That could explain why the share price has stalled recently. Both Savills and eyeQ’s macro model value are flatlining somewhat.
Macro relevance of 70% means big picture stuff is important, and right now the smart machine puts a big emphasis on the BoE producing easy monetary policy conditions.
Savills screens as slightly (+3.17%) rich to macro conditions but that’s not enough to trigger a bearish signal. For now, it’s more a case of watching model value – is this a pause that refreshes, allowing model value to push higher again; or is the environment in danger of turning down?
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
86% | $40.40 | -16.26% | |
76% | € 46.59 | -8.34% | |
68% | $167.46 | -6.39% | |
79% | € 77.81 | -4.64% | |
82% | € 1.70 | -0.23% | |
88% | $95.35 | 2.86% | |
78% | $62.08 | 5.89% | |
75% | $37.48 | 8.13% | |
87% | $55.40 | 11.58% | |
69% | € 40.56 | 12.96% | |
Source: eyeQ. Long Term tactical models. Data correct as at 29 April 2024.
HOG
Harley-Davidson Inc (NYSE:HOG) stock fell by more than 14% after the company reported Q1 earnings. The core segment that sells motorcycles and bike parts significantly decreased year-on-year. Is now a good opportunity to buy HOG?
Impacts of the high interest environment on both consumer confidence and affordability continued to weigh heavily on Q1. With riding season starting to get into gear, the company continues to suffer from softer sales due to the macroeconomic conditions.
However, the company is planning to increase the production of more affordable models and introduce attractive payment plans to attract new consumers.
On eyeQ, Harley-Davidson is in regime (macro relevance of 86%) and April’s sell-off leaves it 16.26% cheap according to eyeQ model value. A lot of bad news is in the price.
The issue is model value has also turned lower. Overall macro conditions have fallen 7.7% over the last two weeks. That rules out a bullish signal even though it screens as cheap. Our trading rules preclude buying something just because it’s cheap; macro conditions need to be improving too.
For now then, it’s one to keep an eye on.
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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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