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Zuma stays, while Trump picks a fight with North Korea - One to buy and one to sell

by , 21 September 2017
Zuma stays, while Trump picks a fight with North Korea - One to buy and one to sell
Global markets have retreated over the past week as tensions rose on Trumps threats directed at North Korea.

Tensions will subside and global markets will continue their rallies on the back of positive earnings surprises.

The big earnings release for our market will be Tencent's (due to Nasper's stake in it) that will be released in the early hours of Wednesday.

All 32 major analysts that research the stock have increased earnings expectations leading up to the releases.

 
In the week ahead:
  • Retail Sales
  • Results expected: COH, KAP, GRF, ACG (15/08), BIL (16/08), HAR, EMI, TRU, EXX, SBK, GFI (17/08), ADI (18/08) and EPE, ADH, SOL, ANG (21/08)
  • Offshore: LG, FujiFilm, Rosneft, (14/0/) Home Depot, Hargreaves Lansdown (15/08), Tencent, Cisco, Target (16/08), Alibaba, Wal-Mart (17/08), Deere & Co, Estee Lauder, Foot Locker (18/08)
  • LDT 15/08: BTI, Kumba, Schroder European Real Estate and Tower Property Fund
Last week’s movers and shakers…
 
Best Performers: Pan Af 9.4%, Harmony 7.6%, DRD 7.3%, AngloGold 6.3% and Sibanye 6.2%.
 
Worst Performers: Torre -5.7%, Shoprite and Zeder -5.5%, Glencore -5% and Old Mutual -4.4%.
 
Other Economic data releases of interest…
  • Tuesday: Monetary Policy Meeting minutes (AUS), CPI (UK), Retail Sales (USA)
  • Wednesday: Earnings Index (UK), Housing Permits, Crude Oil Inventories, FOMC Meeting minutes (USA),
  • Thursday: PPI (NZ), Unemployment Rate (AUS) Retail Sales (UK), Unemployment Claims (USA)
  • Friday: CPI (CA)
 ****************************************
Revealed...
 
In the past 6 months we uncovered
storming gains of...
  • 23.15% in March 2017
  • 46.04% in March 2017
  • 11.33% in June 2017
  • 18.48% in July 2017
  • 29.46% in July 2017
We’ve been dying to bring you the biggest, fastest gains from the new market rally, but we’re forced to stay mum.
 
 
****************************************
One to Buy
 
Old Mutual – Value to be unlocked as unbundling is on the horizon
 
On Friday, Old Mutual put out interim results, which indicated a strong performance. Headline earnings increased 46% to 9 pence. Net client cash flows were up 53%. Unlocking value through the listing of Nedbank along with a simplified OM Plc is near, expect an unbundling mid-2018. On a forward PE of 9.3 and forward dividend yield of 3.9% we see value. Buy below R33.50
 
One to Sell
 
Pioneer Foods – Falling Maize and Raisin prices hit earnings
 
Pioneer released a trading update last week that has signaled some headwinds for the near to medium term. Earnings and sales volumes will be lower than analyst’s expectations. The share price is down over 7% since the release but we expect further downside from here. Next published earnings report will come out in November. Sell above R132.50
 
 
Shorter Term Ideas
  • Standard Bank: Showing a profit already. Target R155.00, place stop loss at R169.00.
  • Sasol: Our Sell call is in the money, place a stop loss at R410 as results are due next week.
  • USD/ZAR: trading well, after closing our short at R13,18 for a small profit before the vote – we went short again at R13.46. Look for R13,10 for another tidy gain.
  • Vodacom: Rally losing momentum, still over bought. Maintain stop loss at R190.00.
  • Sibanye Gold: Raise stop loss to R17.50 to lock in a 16.67% gain, keep target price at R24.50.
Long Term Ideas
  • AECI: At the initial buy price. Buy below R105.00.
  • MTN: Remaining steady around R120 – Hold.
  • Coronation: At support, hold for next leg higher. Keep stop loss at R66 to lock in profit.
  • Glencore: Rally intact, remain long.
  • Wescoal: Long term buy. Add below R2.15.
  • Famous Brands: A push above R130 is on the cards – accumulate below R125.
  • Naspers: Tencent results due Wednesday. Hold.
  • MediClinic: Moving higher - Hold.
  • Richemont: Up 8.33% on the trade, place stop loss at R112 to lock in gains. 
(This article is an extract from Prodigy’s weekly Investor Digest. For more information contact Gavin McCarter on gavin@prodigyam.co.za.)


Zuma stays, while Trump picks a fight with North Korea - One to buy and one to sell
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