eyeQ: 10 actionable trading signals for week beginning 5 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.
5th August 2024 10:00
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 |
| Foxtons Group (LSE:FOXT) | 76% | 74.53p | -16.46% |
| Hargreaves Lansdown (LSE:HL.) | 65% | 1227.82p | -11.62% |
| InterContinental Hotels Group (LSE:IHG) | 68% | 8043.04p | -9.19% |
| Fresnillo (LSE:FRES) | 67% | 617.06p | -7.69% |
| Legal & General Group (LSE:LGEN) | 74% | 235.58p | -7.02% |
| AstraZeneca (LSE:AZN) | 75% | 12412.64p | 1.57% |
| Playtech (LSE:PTEC) | 82% | 519.11p | 3.87% |
| Greggs (LSE:GRG) | 84% | 2841.52p | 7.68% |
| Savills (LSE:SVS) | 80% | 1153.09p | 8.63% |
| Drax Group (LSE:DRX) | 85% | 583.39p | 9.13% |
Source: eyeQ. Long Term tactical models. Data correct as at 4 August 2024.
Greggs
The pasty baker shop's first-half profit increased by 13.8% year-on-year. The consumer bellwether continues to show that Brits are still in love with sausage rolls despite less than ideal economic conditions.
However, eyeQ has a health warning for traders. Greggs (LSE:GRG) is screening rich to macro (7.68%) on eyeQ’ s smart machine - the largest premium to eyeQ's model value in over a year.
Model confidence is 84%, which means macro factors such as economic growth and the Bank of England rate cut matters.
EyeQ has fired a bearish signal on Greggs. The machine is saying that the stock is over-extended, and a fair amount of good news is priced. For the bulls, it’s time to sit this one out and wait for a price correction for a more attractive entry level.
International top 10
| Company | Macro Relevance | Model Value | Fair Value Gap |
| Adobe Inc (NASDAQ:ADBE) | 82% | $590.95 | -12.31% |
| Salesforce Inc (NYSE:CRM) | 82% | $261.93 | -7.63% |
| Volkswagen AG (XETRA:VOW) | 75% | € 110.09 | -6.06% |
| JPMorgan Chase & Co (NYSE:JPM) | 85% | $208.43 | -4.67% |
| General Motors Co (NYSE:GM) | 85% | $41.84 | -1.62% |
| Mercedes-Benz Group AG (XETRA:MBG) | 85% | € 57.38 | 1.58% |
| PayPal Holdings Inc (NASDAQ:PYPL) | 78% | $59.57 | 3.88% |
| McDonald's Corp (NYSE:MCD) | 79% | $259.62 | 6.17% |
| Exxon Mobil Corp (NYSE:XOM) | 72% | $99.07 | 15.24% |
| Valero Energy Corp (NYSE:VLO) | 72% | $125.55 | 15.49% |
Source: eyeQ. Long Term tactical models. Data correct as at 4 August 2024.
Adobe
The tech darlings of Wall Street are in the spotlight in this choppy earning season and Adobe Inc (NASDAQ:ADBE) wasn’t left out.
The leading software company has underperformed IGV (iShares Expanded Tech-Software ETF) this year, which underlines some of its legal issues and demanding valuation.
However, eyeQ has a different view. The stock now sits 12.31% cheap to overall macro conditions. EyeQ's model value has risen by an astonishing 12.29% in the last month.
Model confidence is high (82%), which means macro matters. Falling inflation expectations are pushing up eyeQ's model value in recent weeks.
The current price level presents an attractive entry point for the bulls.
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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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