eyeQ: 10 actionable trading signals for week beginning 8 April 2024
interactive investor has teamed up with experts at eyeQ whose artificial intelligence and own smart machine generate actionable trading signals. Here, they name 10 UK shares and 10 overseas stocks trading out of sync with macro conditions.
8th April 2024 10:33
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 new 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, singe 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 |
78% | 32.65p | -6.9% | |
72% | 14.35p | -10.1% | |
86% | 191.87p | -2.9% | |
71% | 41.97p | -1.5% | |
74% | 260.06p | -1.2% | |
68% | 424.75p | 1.7% | |
65% | 467.66p | 4.8% | |
86% | 1238.45p | 5.4% | |
71% | 344.14p | 6.9% | |
73% | 453.00p | 7.6% | |
Source: eyeQ. Long Term tactical models. Data correct as at 8 April 2024.
PageGroup
PageGroup (LSE:PAGE) shares surged around 10% last week, their biggest gain in over two years. The catalyst was an upgrade from UBS, which now target 520p because they believe the recruitment business will recover over the second half of 2024.
As we’ve mentioned before, UK recruiters are an important bellwether we need to watch. The official statistics are struggling to keep up with the changes in how people work post-Covid. The response to the official surveys is low, and economists fear they are no longer an accurate gauge of the overall labour market. The health of recruitment companies could be a timely way to measure whether the labour market is continuing to produce enough jobs.
UBS’ old target was 460p, which is where the eyeQ smart machine currently says PAGE “should” trade given overall macro conditions. That means last week’s rally wasn’t justified by current economic conditions and it now sits 4.8% rich to eyeQ’s model value.
Put another way, it only makes sense for investors to chase PAGE higher from here if you buy into the UBS view that the UK jobs market is going to pick up.
International Top 10 | |||
Company | Macro Relevance | Model Value | Fair Value Gap |
81% | $10.56 | -10.3% | |
67% | $7.97 | -9.2% | |
84% | $19.46 | -9.1% | |
66% | $7.46 | -8.5% | |
79% | C$191.84 | -7.3% | |
73% | $10.91 | 13.1% | |
67% | C$14.41 | 13.7% | |
65% | $9.78 | 13.9% | |
84% | €18.22 | 15.7% | |
67% | $18.60 | 21.3% | |
Source: eyeQ. Long Term tactical models. Data correct as at 8 April 2024
Natural Gas Services
Last week, Natural Gas Services Group Inc (NYSE:NGS) announced its fourth-quarter earnings and revenue. The results surpassed expectations resulting in the stock jumping almost 20%.
From a macro perspective, this shouldn’t be surprising given the ongoing supply cuts by OPEC+, strong US consumer demand and global geopolitical tensions.
The good news is that macro conditions are improving - model value has risen strongly in the last month. That said, the recent rally has moved ahead of improving fundamentals. Last week’s post-earnings jump leaves NGS 21.3% above eyeQ’s model value.
This pattern can be seen across the energy sector where most stocks screen as rich relative to overall macro conditions.
All eyes will be on the US inflation report later this week for more clues on the Federal Reserve’s next policy move. Energy stocks are defensive equity positions, which means investors turned to them during periods of high inflation and heightened geopolitical concerns.
There is therefore a good story for energy stocks. It’s just that, at these levels, a lot of good news is already in the price.
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.
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