Icarus Signal New Entries For Today: Aristocrat

This story features ARISTOCRAT LEISURE LIMITED, and other companies. For more info SHARE ANALYSIS: ALL

Daily update on share prices and consensus price targets.

By Rudi Filapek-Vandyck

What do you get when you mix a big chunk of short positions with an unexpectedly positive earnings report? A big spike in share price. The current reporting season has witnessed a few… Wotif.com ((WTF)), Seek ((SEK))… and Aristocrat Leisure ((ALL)).

Witness on the price chart below how the share price spiked from below $2.60 to above $2.90, all in a matter of minutes. Problem number one is that is exactly where the average price target has settled post the event. Don't be surprised if the share price finds the easiest way forward is by retreating to lower levels, unless some trading programs out there have by now identified Aristocrat as the momentum play du jour.

It is during times of low trading volumes that these trading programs have an unusually large impact on the share market, in particular for stocks that have fallen off the radar of the wider investment populace. Think OneSteel ((OST)), for example, or Prima Biomed ((PRR)), or Gunns ((GNS)), or Bluescope Steel ((BSL)). There's nothing wrong with small traders trying to make an extra buck by jumping in and out of these stocks, as long as long term investors don't get confused and try to join that same game, with a longer term perspective.

That big jump has catapulted Aristocrat above target, a situation that may well correct itself as early as today (the shares are lower as I write this story). Now that we mention "above target", the other 51 stocks that are in a similar position prove an amalgamation of all kinds of different themes currently impacting on price action in the Australian share market. There's Caltex ((CTX)) whose share price has tried (and tried) to remain at elevated levels ever since company management announced an official review of the refinery assets. This has sparked all kinds of "what if?" upside scenarios.

The problem is, however, that review is going to take months, not days, and in the meantime it's hard to keep up the enthusiasm (while there are other opportunities such as Aristocrat).

As per always, this group of stocks contains quite a few that are affected by corporate action, rumoured or announced. Stocks such as Goodman Fielder ((GFF)), Tassal Group ((TGR)), Pacific Brands ((PBG)), Spotless Group ((SPT)), Austar ((AUN)), Maryborough Sugar ((MSF)), Treasury Wine Estates ((TWE)), Billabong ((BBG)) and Ludowici ((LDW)).

Some of the stocks in this group might as well be regarded as "regulars", such as Metcash ((MTS)), Cochlear ((COH)), Monadelphous ((MND)), SP Ausnet ((SPN)), Domino's Pizza ((DMP)), QR National ((QRN)) and Beach Petroleum ((BPT)).

And then we have a group of abandoned "dogs" whose trading momentum is attracting new interest these days. Irrespective of what ignorant market commentators have to say about these share price movements, it doesn't mean all that much. It certainly doesn't signal these stocks are now great buys for the longer term. Think OM Holdings ((OMH)), Leighton Holdings ((LEI)), Gunns ((GNS)), Murchison Metals ((MMX)).

GR Engineering ((GNG)) featured prominently in this week's Weekly Insights (check your inbox) so watch out with getting too excited about this one.

If we descent one step on Icarus' radar, we see there are as at today (price action until yesterday) 19 stocks trading near their targets, including newcomers Tishman Speyer Office Fund ((TSO)), James Hardie ((JHX)), Sigma Pharmaceuticals ((SIP)), Customers ((CUS)), Spark Infrastructure ((SKI)), Talent2 ((TWO)), APN News & Media ((APN)) and Lindsay Australia ((LAU)). These eight stocks on their own tell us a lot about what is happening in today's share market: part of the market is still chasing yield, others are positioning for corrections in a long term downtrend, while others are buying into turnaround stories.

It is possible that, apart from the continued chase for yield, I am seeking too much behind these share price moves. Maybe "momentum trades" inspired by price charts and technical indicators pretty much covers most of the story?

Investors should consider the information and data are provided for research purposes only.

Stocks <3% Below Consensus

Order Symbol Current Price($) Consensus Target($) Difference(%) 1 APN $ 0.89 $ 0.90 1.81% 2 CUS $ 0.91 $ 0.91 0.55% 3 JHX $ 7.20 $ 7.22 0.29% 4 LAU $ 0.20 $ 0.20 2.56% 5 SIP $ 0.60 $ 0.60 0.50% 6 SKI $ 1.40 $ 1.41 0.57% 7 TSO $ 0.91 $ 0.91 0.00% 8 TWO $ 0.48 $ 0.48 1.05%

Stocks Above Consensus

Order Symbol Current Price($) Consensus Target($) Difference(%) 1 ALL $ 2.90 $ 2.66 – 8.41% 2 CTX $ 13.26 $ 13.16 – 0.74% 3 GFF $ 0.69 $ 0.58 – 15.18% 4 GWA $ 2.42 $ 2.41 – 0.29% 5 MTS $ 4.23 $ 4.20 – 0.71% 6 OMH $ 0.40 $ 0.36 – 8.86% 7 TGR $ 1.28 $ 1.27 – 1.02% 8 WTF $ 4.56 $ 4.52 – 0.79%

Top 50 Stocks Furthest from Consensus

Order Symbol Current Price($) Consensus Target($) Difference(%) 1 ACL $ 0.44 $ 0.89 104.60% 2 AJA $ 2.03 $ 3.82 87.93% 3 ALK $ 1.25 $ 1.92 53.60% 4 AMX $ 1.35 $ 2.22 64.67% 5 AOH $ 0.28 $ 0.65 132.14% 6 AQP $ 2.02 $ 3.25 60.89% 7 AVG $ 0.34 $ 0.63 88.06% 8 BDR $ 0.78 $ 1.22 56.03% 9 BND $ 0.78 $ 1.30 66.67% 10 BOL $ 0.27 $ 0.50 88.68% 11 BSL $ 0.42 $ 0.63 52.04% 12 BTA $ 0.77 $ 1.79 133.99% 13 CND $ 0.42 $ 0.74 78.31% 14 COK $ 0.39 $ 0.68 73.08% 15 CVN $ 0.15 $ 0.55 266.67% 16 DTE $ 0.39 $ 1.20 211.69% 17 EVR $ 2.26 $ 3.50 54.87% 18 FND $ 0.42 $ 0.67 59.52% 19 GRY $ 1.21 $ 1.95 60.99% 20 GUF $ 0.79 $ 1.40 78.34% 21 HGO $ 0.25 $ 0.41 67.35% 22 HST $ 0.52 $ 1.17 124.42% 23 HTA $ 0.05 $ 0.08 73.91% 24 IAU $ 1.34 $ 2.03 51.72% 25 IFN $ 0.27 $ 0.60 123.70% 26 IPD $ 0.48 $ 1.14 137.50% 27 JET $ 0.65 $ 0.96 48.15% 28 KGD $ 1.04 $ 2.20 111.54% 29 KZL $ 0.31 $ 0.46 48.39% 30 LYC $ 1.23 $ 2.01 64.33% 31 MBN $ 0.99 $ 1.74 75.35% 32 NCR $ 0.33 $ 0.65 96.97% 33 NXS $ 0.20 $ 0.30 53.85% 34 OTH $ 0.52 $ 1.10 111.54% 35 PAN $ 1.29 $ 2.14 66.54% 36 PEM $ 0.44 $ 0.75 72.41% 37 PPC $ 0.76 $ 1.33 74.74% 38 PPX $ 0.11 $ 0.34 207.27% 39 PXS $ 1.04 $ 1.70 63.46% 40 QRX $ 1.84 $ 2.77 51.12% 41 RES $ 0.41 $ 0.75 82.93% 42 RFX $ 0.78 $ 1.62 107.69% 43 SLX $ 3.22 $ 5.54 72.05% 44 SMR $ 0.87 $ 1.45 66.67% 45 SYM $ 0.11 $ 0.24 128.57% 46 TIS $ 0.36 $ 0.82 130.99% 47 TSM $ 0.38 $ 0.89 137.33% 48 TXN $ 0.65 $ 1.28 96.92% 49 VMS $ 0.33 $ 0.61 87.69% 50 YTC $ 0.40 $ 0.70 75.00%

To see the full Icarus Signal, please go to this link

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms