eyeQ: 10 actionable trading signals for week beginning 7 May 2024
We've teamed up with experts at eyeQ whose artificial intelligence 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.
7th May 2024 10:54
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 |
68% | 1715.14p | -18.86% | |
69% | 1258.77p | -15.80% | |
78% | 577.95p | -4.25% | |
82% | 3413.62p | -3.61% | |
82% | 2800.12p | -2.72% | |
80% | 507.31p | 0.41% | |
81% | 1076.20p | 3.22% | |
73% | 1718,84p | 6.61% | |
80% | 54.24p | 7.76% | |
85% | 696.21p | 10.17% | |
Source: eyeQ. Long Term tactical models. Data correct as at 7 May 2024.
easyJet
On 4 March in one of our first posts for interactive investor, we warned that it wasn't the ideal time to be buying easyJet (LSE:EZJ). It wasn't that our smart machine was bearish - model value (where our smart machine says a stock should be priced) had been trending higher, i.e. macro conditions were improving for the stock price. It was more that a lot of good news was in the price already.
The stock was trading at 563p then. Today it's 552p. Crudely, after rallying almost 60% between late October and mid-February, the stock has done nothing. It's traded sideways around the 550p level.
But recently, eyeQ model value has started rising. In fact, it's up 8.8% since mid-April. easyJet has not kept pace with the move so it now screens as 4.25% cheap to macro conditions.
That's not enough to trigger an official bullish signal yet, but it is one to keep a close eye on.
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
67% | $184.24 | -18.52% | |
69% | $80.79 | -13.50% | |
84% | $47.20` | -12.49% | |
67% | € 139.05 | -3.23% | |
85% | $78.06 | -0.86% | |
75% | $115.30 | 1.22% | |
68% | $177.87 | 3.47% | |
78% | $91.04 | 3.70% | |
84% | $174.56 | 3.77% | |
78% | $62.19 | 5.02% | |
Source: eyeQ. Long Term tactical models. Data correct as at 7 May 2024
Uber
Uber Technologies Inc (NYSE:UBER) was in a strong macro regime (the story that’s driving the share price) for most of 2023, but spent the last five months trading more off company specific news. And with earnings due tomorrow, company fundamentals remain important.
However, a 16% gain in macro relevance (how confident we are in the model value) over the last month means the big picture is once again critical for investors. And while model fair value did dip a little in April, overall macro conditions have actually remained largely stable. That means last month’s sell-off took Uber into cheap territory on eyeQ.
Annoyingly, it didn’t quite get cheap enough to trigger an official buy signal. We got very close last week, but it didn’t quite hit the threshold. Still, it is cheap to macro conditions which are moving higher, so it is a stock that we’re positive on for choice.
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.
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