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Top 3 Tradeable Ideas For The Week
Tradeable, Tradeable Ideas | 06 August 2014
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By: Tradeable
Articles (256)

This week we saw the American markets recover slightly from its previous rout. Asian markets continued to be relatively mixed as conflicting data from China sent some investors scurrying for safety. Fortune favours the brave however as we are in the midst of earnings season.

We look at three of the top read ideas that were posted on Tradeable and give our own two cents (without GST).

1. Las Vegas Sands Ready To Move Up Soon

  1. Las Vegas Sands has been on a very clear uptrend since the beginning of 2013.
  2. There has been a 20 percent correction since a high achieved in March 2014. This could present an opportunity for investors to buy in.
  3. With a target price of about US$82.18 and a tight cut-loss, the trade would present an attractive risk-reward for traders.

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What we think: Las Vegas Sands offers a good proxy to the international gambling industry. If you are tired of Genting SP’s limited scope in terms of geographic coverage, and still want to get your hands on proceeds from a sin trade, then LVS is the counter for you. Aside from the above technical call, we note that analysts are generally quite fond of the US-listed counter.

Source: FactSet, Analysts' Calls On Las Vegas Sands

With gambling set to be a major theme in Asian economies (Japan, Cambodia, etc), we feel that the sector is poised for further growth. Additional factors like increasing wealth and affluence will play a part in the industry’s rise as well.

2. Technicals Imply SGX Headed On Upward Trend

  1. SGX appears to have made a golden cross since the middle of July 2014.
  2. The counter accumulated 3 bullish candlesticks out of 5 as a confirmation of the cross.
  3. RSI has crossed into overbought territory. Traders might want to look at this indicator carefully as SGX typically corrects after a short time in overbought territory.

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What we think: While we don’t exactly disagree with the technical analysis, we are concerned about the medium to long term impact of recent changes made by the MAS. The near-eradication of contra-trading is seen as a major dampener to trading volumes. Trading volumes are the bread and butter of SGX and if such volumes were to be drastically affected, SGX could be poised for a major inflexion point.

3. Sell SIA Engineering On Sinister Signposts

  1. SIA Engineering reported lower margins recently. EBIT margins contracted to 7 percent, the lowest since 1Q10.
  2. Management has turned bearish. Management stated that, “The outlook for the SIAEC Group has become more challenging with the decline in heavy checks and reduction in engine shop visits”.
  3. New hangar facilities in the Philippines are coming online when workload is slowing down.

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What we think: Oh how the mighty have fallen. Just this same time last year, we were raving about SIA Engineering being a good dividend play in an otherwise unattractive aviation industry. Within that one year, analysts have gone from bullish to bearish without batting an eyelid.

Source: FactSet, Analysts' calls on SIA Engineering

While we continue to feel that SIAE will remain a strong dividend play (above 80 percent dividend payout and above 4 percent yield for the past five years), the growth story for the counter looks exceedingly bleak. Perhaps, dividend-focused investors might want to look at the counter if its yield increases beyond the 5 percent mark.

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Singapore Exchange  8.400 +0.18 +2.19%   
Business: [FY18 Turnover] Equities & fixed income (48.2%), derivatives (40.2%), mkt data & connectivity (11.6%).

Insight: Jan-19, 1H19 operating revenue increased 5.7% to $... Read More
SIA Engineering Co  2.610 +0.02 +0.77%   
Business: A leading aircraft maintenance, repair and overhaul (MRO) company providing total maintenance solutions to a client base of international airlines. [FY18 Turnover] Airframe and Line Maintenance (97.5%), Engine and Component (2.5%).

Insight: May-19, FY19 revenue was 6.8% lower at $1b largely... Read More

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