Summary
The RRG weekly is showing the cleanest rotations into consumer discretionary ETF (IXY, red) against the broader market.After a bullish weak in the market and the FED taking a pivot after the collapse of a few major banks, the markets have found strength once again therefore we are looking for value to ride new found momentum.
Filtering the heat map using PEG (price to earnings to growth ratio), we get a clearer visual of undervalued stocks, particularly focusing on consumer discretionary sector. If we look closely, we can see a handful of stocks in green that may provide the best value opportunities if the sector can outperform.
Consumer Discretionary Fund ETF (MACD, Daily)
Although the MACD is a 'lagging' indicator, we like to see a longer term 'buy' signal develop to help confirm out bias, as you can see from this chart, it tracks relatively accurately to ETF funds.
Lenar Corporation
The home construction company appears to remaining in good grounds with a recent upturn in MACD moving the market back onto the longer term uptrend. Technically, there is no reason to believe we could see any selling in the near term with its sights set on $116.80 once again.
Strategy: leveraged positions may remain exposed to a bullish push towards the highs at $116.80 unless a clear downturn in the daily MACD develops, and we get a solid break of of support around $90 would run the risk of deeper pullback, if not at least a period of consolidation.
For ordinary share holders (unleveraged), PEG value (0.34) points towards significant undervaluation in comparison to the broader market, therefore it would make sense to hold still the value has been rebalanced.
Marriot International
Upturn in the MACD points towards a bullish move as the trend slowly makes its way higher.
Looking at the fundamental base below, the price to operating cash flow shows us the forecast for 2025 around $250 per share.
Strategy: Keep long exposure towards $195 unless we get a break down of $145 and trend line support. Consider leaving partials running for a longer term appreciation in the company.
Something to note: The price correlation with operating cash flow is less erratic than other markets and shows more stability with the correlation. Supports the idea of a low PEG ratio driving price higher in the next 24 months
Hilton Worldwide
Similarly, Following on from a period of consolidation and a new found uptrend, now the MACD confirms an upturn signalling a bullish move may be ready to occur once again.
Given a low PEG ratio (0.69), it could be a stock at the top of the watchlist if the sector were to outperform the market.
Strategy:Remain bullish for a move towards $167 as long as we hold above the support level of $116. The risk reward doesn't offer much more than 1;1 however this could be considered a long term play.
General Motors
Another company with a low PEG ratio of only 0.38. This gives warrant to an investment where the stock could rebalance itself.
Technically we have been trading in a range since July 22, where the MACD shows relatively accurate signs of the next bullish push. Currently we are seeing this in alignment with sector rotation supporting the idea of a push at least back towards range highs, if not breaking out finally.
Strategy: Hold core long positions at least to range highs around $44, however consider holding partial positions for a breakout and run up to $64 throughout the course of 2023.
Commentaires