Growth Focus: Aveo Group

by Patrick Taylor



Date of Data Capture: 19/11/2015
 
Name: AVEO GROUP (AOG)
      
Classification:Aged-Care Property
 
Current Price: $3.04
 
Market Capitalisation: $1.54B
 
Forecast EPS Growth: 44%
 
Gross Yield: 1.94%
 
Consensus Price Target: $3.24
 
# Covering Analysts: 5
 
Discount at Current Price: 6%
 
Price Target Trend: Increasing Flat
 
Signal Time Frame: Medium (Weekly) Short (Daily)
 
TrendBias: Up Flat (Weekly) (Daily)

Indicators:
Short-term:Positive
Medium-term: Positive
Long-term: PositiveNeutral

Recommendation: Buy
 
Set up Notes:
 
·          AOG has been working against strong price resistance at $3.00, with that breaking it should begin to act as support.
·          Moving up well through historical levels over the last year or so – the next level up from here is a good potential gain.
·          Good cluster of support ranging down from $3.00 to $2.60, with Resistance at 3.50, 3.60 and $3.80.
·         Good positive momentum across all the major timeframes.
  Growth Focus: Aveo Group (AOG)
 
Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.
 
Volatility in the general market continues as opposing trends in various timeframes grind against each other. At the moment we still have some negative momentum carrying across from the longer-term downtrend but with short and medium-term trends recently turning positive we could see a good short-term rally ahead.
 
Hoping to target an aging Boomer demographic we are turning our focus on Aveo Group (AOG) an aged-care property operator and developer of retirement villages. As risk and reward tend to be fairly evenly weighted it is worthwhile to point out this stock can tread a tumultuous path.
 
Still grinding its way through its ongoing recovery from the GFC where it topped out at $25 late 2007. AOG continues riding the rally that has lifted it from its lows around $1 late 2012 and with important structural and dynamic resistance breaking at $2.90 and $3.00 recently we think there should be more to come.
 
Aveo Group is strongly correlated to its long-term (and currently positive) ongoing uptrend and we have confidence that the long-term structural/dynamic resistance cluster at $5.00 and ranging from $4.86 to $5.28 should act as a magnet for the price.
 
Lately the short-term action has been significant with the recent break and retesting of support around $3.00. This should solidify into support and we can then look to focus on our dynamic target of $3.50 - $3.52.
 
There is some good fundamental support with a consensus discount to today’s pricing around 6% and aggregate targets rising ahead of the price. Earnings growth forecasts look robust with brokers’ reports unanimously positive. While there is a dividend it is a fairly small cherry on top, though with time are expected to increase. For all these reasons we think AOG is a good higher-risk capital growth prospect.

Disclaimer

This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.