eyeQ: 10 actionable trading signals for week beginning 9 September 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.
9th September 2024 09:28
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 |
76% | 1040.45p | -8.44% | |
70% | 60.57p | -7.35% | |
71% | 756.48p | -6.25% | |
74% | 292.09p | -6.21% | |
79% | 668.15p | -6.06% | |
71% | 13251.74p | -4.76% | |
71% | 1297.34p | 0.20% | |
82% | 287.91p | 1.06% | |
68% | 634.80p | 3.38% | |
72% | 461.44p | 3.55% |
Source: eyeQ. Long-Term tactical models. Data correct as at 9 September 2024.
Lloyds Banking Group
UK banks have been one of the best-performing sectors in 2024. Lloyds Banking Group (LSE:LLOY) stock, for example, is up 24% since the start of the year.
But more recently the share price has come under pressure. Overall, this reflects pressure on global equity markets more generally, rather than a Lloyds-specific story.
It is also worth noting that Lloyds is one of those stocks where macro conditions are holding up. eyeQ model value has risen 3.1% in the last month. This means the recent sell-off leaves the stock 7.35% cheap to the broad macro environment.
Seasonal patterns point to September often being a volatile trading environment. But for those investors looking to use pullbacks within choppy markets as opportunities to re-load, it’s worth noting some value is starting to be built in Lloyds Bank from a macro perspective.
International top 10
Company | Macro Relevance | Model Value | Fair Value Gap |
69% | $148.46 | -10.50% | |
88% | $522.73 | -8.99% | |
83% | $65.62 | -7.15% | |
67% | $29.31 | -2.62% | |
77% | € 625.99 | -2.29% | |
74% | $76.05 | 1.73% | |
65% | $173.60 | 2.11% | |
87% | $549.94 | 2.39% | |
73% | $32.02 | 8.81% | |
80% | $226.13 | 10.92% |
Source: eyeQ. Long-Term tactical models. Data correct as at 9 September 2024.
LVMH Moet Hennessy Louis Vuitton
Last week’s sell-off in equity markets is starting to look like a repeat run of the early August moves. But as the Lloyds example above shows, what’s true at the index level doesn’t always hold for single stocks.
While macro remains supportive for Lloyds, the opposite is true for French luxury goods company Lvmh Moet Hennessy Louis Vuitton SE (EURONEXT:MC). eyeQ’s model value is down 9% in September. Our model shows the stock is beholden to global economic growth and risk appetite in financial markets.
That’s why renewed recession fears and volatile equity markets have weighed on the stock. There’s no immediate trade signal. LVMH has fallen in line with eyeQ model value, i.e. it is behaving as macro conditions say it should.
Macro relevance is high and stable so, in short, investing in LVMH requires a strong understanding of the bigger picture. Watch our model value for timely clues on whether macro conditions are improving or deteriorating, and whether the stock is leading or lagging those moves.
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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