eyeQ: 10 actionable trading signals for week beginning 8 July 2024

"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.

Source: eyeQ. Long Term tactical models. Data correct as at 8 July 2024.

Kingfisher

The valuation gap is small but, at 1.6% cheap to eyeQ’s model value, Kingfisher (LSE:KGF) is worth noting.

Firstly, note macro conditions are improving; our model value has risen nearly 6% in the last month.

Secondly, the home improvement company owns stores like B&Q and, as such, could potentially benefit if the UK housing market enjoys a resurgence under a new Labour government.

Astra Zeneca

After rallying strongly in April, UK pharmaceutical giant AstraZeneca (LSE:AZN) has done very little. But while the last two months have seen the share price move sideways, eyeQ model value has started to move higher. It’s risen 7.2% so far in July as macro conditions start to improve.

The stock has yet to recognise the change in its macro environment. On eyeQ it sits around 5% cheap to model value, the cheapest it has been since mid-February.

Source: eyeQ. Long Term tactical models. Data correct as at 8 July 2024.