Contact Energy Ltd [CEN.NZ] was a Stock of the Week pick back in June and I picked it then because the share price was heading below 6 bucks and there seems to be some resistance to the stock price falling too far past the $5.50 mark and that is why I have included it again.
The stock has retrenched below $6 4 times this year and has always retraced back above that mark. As high as just over $6.50 on one occasion.
A good stock for you short termers out there and a good opportunity for those of you looking for a good company on the cheap for a long-term proposition.
I must repeat though that management of this company is poor but even a monkey running this company can make money.
Could go lower than its current $5.84, with a low this year of $5.47.
Buy on further weakness if this stock has been on your watchlist.
Contact @ Share Investor Blog
Not so fast Davy Boy
Still Watching Contact Energy
Beam me up Davy
Stock of the Week: Contact Energy
MarketWatch: Contact Energy - June 2009
MarketWatch: Contact Energy - Jan 2009
Contact Energy looks bright during dark times
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Amazing how well this chart has been following the trend lines.
ReplyDeleteIf one was a technical trader, they would be waiting for the breakout of the rather large multi month symmetrical triangle pattern, to determine short term trend.
Since it is typically a continuation pattern, then one would expect it to break to the downside, based solely on the chart.
Hey SB, the last line of your comment intrigues me.
ReplyDeleteWhy?
The immediate trend prior to the symmetrical triangle pattern forming was down, therefore typically the breakout would be a continuation of that trend.
ReplyDeleteYou would get a breakout to the downside, a pullback up to the support of the trend line and then follow through the downside.
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:symmetrical_triangle
The bottom trend line has five touch points, and the upper trend line has three touch points, which in Technical analysis would make it reliable pattern to trade. A break of the lower trendline typically would be significant.
Of course the P/E ratio of 28 and the dividend of 7% would have to be considered before trading the downside.
Of course if some fundamental news event were to push this chart above the upper trendline, ...
Look at the 2 year chart of SLG, you can see the triangle formed (in 1st half 2008) with the base at 0.60 to 0.35, and once it broke out of the triangle, it moved 0.30 to the downside.
ReplyDeleteThat would be a fairly good example of how these patterns typically form.
Of course, they are just patterns, and fundamentals eventually determine the stock price.
Valuecruncher has just issued a new valuation on Contact Energy. Seems they think it is overvalued by 68% using discounted free cash flow modeling.
ReplyDeletehttp://www.valuecruncher.com/companies/314
Interesting take by VC but they ignore Contact's position as a consistent earner and a horrible 2009 makes their comparisons look worse than they should.
ReplyDeleteI expect a better 2010 for them.