eyeQ: 10 actionable trading signals for week beginning 4 November 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.
4th November 2024 09:12
"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 |
|
75% |
688.58p |
-13.25% | |
|
77% |
65.68p |
-12.47% | |
|
69% |
693.54p |
-11.14% | |
|
75% |
81.07p |
-9.25% | |
|
66% |
146.53p |
-8.38% | |
|
72% |
157.81p |
-7.06% | |
|
74% |
1297.85p |
-2.27% | |
|
84% |
705.41p |
3.24% | |
|
67% |
1261.64p |
4.57% | |
|
70% |
224.60p |
6.65% | |
Source: eyeQ. Long Term tactical models. Data correct as at 1 November 2024
BAE Systems
Defence titan BAE Systems (LSE:BA.) has put in a stellar performance over the last 12 months, with the share price rising by almost 30% as geopolitical tensions have pushed governments to increase spending on defence.
Chancellor Rachel Reeves revealed on Wednesday that she pledged to provide the defence ministry with an additional £2.9 billion – an equivalent of 2.5% of GDP. The executives of the firm are relieved to hear this after murmurs that possible cuts were heading towards the sector.
With conflict still raging and no end in sight, what does eyeQ’s AI powered machine say about the stock? One thing to note is that model confidence crossed our threshold (65%) two weeks ago for the first time in a year. The machine gives the stock a score of 74% on macro relevance, which means the bigger picture stuff matters.
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At this juncture, the stock finds itself sitting 2.27% under eyeQ model value. The model hasn’t done much in the last four weeks, it flatlined. The smart machine shows that model wants decent overall growth, lower volatility and tighter credit conditions.
At this point, the smart machine hasn’t fired a signal but keep an eye on the stock and follow the news closely. The US elections are coming up on Tuesday and this is a major event as it could pave the way for peace talks either in Ukraine and/or the Middle East.
International Top 10 | |||
|
Company |
Macro Relevance |
Model Value |
Fair Value Gap |
|
81% |
$455.89 |
-7.06% | |
|
71% |
$151.21 |
-6.59% | |
|
82% |
€ 58.65 |
-4.82% | |
|
73% |
$426.56 |
-3.95% | |
|
67% |
$28.25 |
-2.06% | |
|
74% |
$130.80 |
4.14% | |
|
67% |
$185.99 |
6.03% | |
|
80% |
$90.34 |
7.42% | |
|
85% |
$23.95 |
13.39% | |
|
RYA |
81% |
€ 14.50 |
19.52% |
Source: eyeQ. Long Term tactical models. Data correct as at 1 November 2024
Mercedes Benz
Germany’s business outlook brightened slightly in October, fuelling hopes that Europe’s largest economy is getting things back on track. However, the auto industry is struggling to keep pace with tough competition from China, and strict green regulations are making things worse.
Giants like Mercedes-Benz Group AG (XETRA:MBG) are finding the shift to electric vehicles costly, and China’s economic slowdown has hit the German automaker hard, especially orders of their high-end models.
eyeQ’s smart machine shows that macro forces are a strong explanatory play – 82% macro relevance. The stock screens 4.82% cheap to overall macro conditions, just shy to trigger a bullish signal.
The stock hasn’t done much last month, it moved sideways. The model shows the stock wants higher inflation and higher growth which is in line with higher output and increased spending.
With that said, investors would benefit from keeping an eye on economic data coming out of Germany in the coming months where you could see a scenario of a friendlier price entry point for Mercedes.
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.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.
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