Platinum mines still dominating the top 5 overbought list. C has also clearly become the new A+ on the JSE, with two of the greatest success/growth stories, namely Capitec and Clicks, still powering ahead. Cartrack has now joined the “Lekkerrrrrr by die C” party.
Oversold:
Prosus 28
Cashbuild 31
Accelerate Property 34
BATS 34
Emira Property 34
Overbought:
Northam Platinum 81
Amplats 78
Clicks 78
Capitec Bank 78
Cartrack 75
This week I want to spend some time on Clicks. Clicks released a trading statement this week (7 October 2019) stating that their diluted headline earnings per share (HEPS) for the year ending 31 August 2019 will be up between 15% - 18%. This is not only up from their previously stated 10% -15% growth, but also well ahead of consensus expectations of 13%. This saw Clicks share price run more than 14% since the announcement was made; to NEW ALL TIME HIGHS!
Naturally the short term technicals indicate a heavily overbought share price according to its 14-day RSI. We also saw a HUGE outperformance against the FTSE/JSE All Share. To put the current valuations in perspective:
Forward EV/EBITDA is 22 compared to Foschini, Mr Price, Truworths and Woolworths of 8 and Dis-Chem’s 13.
When we look at the weekly chart, we can clearly see the extend of Clicks’s performance. Should the bullish run continue, short-term target should be around R268.
I am however worried about the current valuations. Should we see a pullback, we could see the share price seek support at the 50-day moving average at R196. This coincide with the current consensus target price (Thomson Reuters) of R203 on the company. A break and close below R196 will have me monitoring the bottom of the long-term support trend (at R191), which if I was a short-term trader, would also act as my stop-loss.
In short – great quality company, with solid reasons for the great performances. Remember, there haven’t been lots of success stories on the JSE lately, with investors clearly pushing towards these very few companies (artificial support). I am however worried about current valuations and got a personal target price on the share price of R215.
Oversold:
Prosus 28
Cashbuild 31
Accelerate Property 34
BATS 34
Emira Property 34
Overbought:
Northam Platinum 81
Amplats 78
Clicks 78
Capitec Bank 78
Cartrack 75
This week I want to spend some time on Clicks. Clicks released a trading statement this week (7 October 2019) stating that their diluted headline earnings per share (HEPS) for the year ending 31 August 2019 will be up between 15% - 18%. This is not only up from their previously stated 10% -15% growth, but also well ahead of consensus expectations of 13%. This saw Clicks share price run more than 14% since the announcement was made; to NEW ALL TIME HIGHS!
Naturally the short term technicals indicate a heavily overbought share price according to its 14-day RSI. We also saw a HUGE outperformance against the FTSE/JSE All Share. To put the current valuations in perspective:
Forward EV/EBITDA is 22 compared to Foschini, Mr Price, Truworths and Woolworths of 8 and Dis-Chem’s 13.
When we look at the weekly chart, we can clearly see the extend of Clicks’s performance. Should the bullish run continue, short-term target should be around R268.
I am however worried about the current valuations. Should we see a pullback, we could see the share price seek support at the 50-day moving average at R196. This coincide with the current consensus target price (Thomson Reuters) of R203 on the company. A break and close below R196 will have me monitoring the bottom of the long-term support trend (at R191), which if I was a short-term trader, would also act as my stop-loss.
In short – great quality company, with solid reasons for the great performances. Remember, there haven’t been lots of success stories on the JSE lately, with investors clearly pushing towards these very few companies (artificial support). I am however worried about current valuations and got a personal target price on the share price of R215.
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