Invast says buy Macquarie Group Limited
15/03/16 closing share price: $67.86
52 week high: $86.72 52 week Low: $58.28 Most recent dividend: $3.60 (Int + final) Annual dividend yield: 5.23% Franking: 40%
Macquarie Group has been underperforming the broader ASX 200 index significantly in 2016. At its low of $58.26 on February 12, MQG was down just short of 30% compared with the ASX 200 decline of around 11%. Macquarie is currently down around 19% ($66.95) compared to 2.5% for the index. We see this turning around in months to come and for Macquarie continuing to rally into its earnings announcement scheduled for the May 6.
The underperformance was due partly to a lacklustre Q4 earnings and profit forecast cuts for its commodity and financial markets business. The recovery in energy and metal prices and the overall market should provide a boost to this business and we are looking for a better overall performance to year end than the market currently has priced in.
On a technical level, the short run downtrend which has been in place since early January has been broken and the recent break about $65.50 is the start of a new uptrend.
Obviously MQG will be partially reliant on the performance of ASX 200 as a whole, but we feel that after significant underperformance in the start of the year, it will strongly outperform the index to years end.
Invast Conviction call: Buy Time frame: 12 Months
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