Likes
This week, CMC Markets’ Michael McCarthy likes Perpetual (PPT), a wealth manager, which offers a diversified range of investment and services.
“In my view it was caught in an anti-active funds management downdraft. Its status as a financial “pure play” may see a PE premium emerge over the next 12 months,” he says.
Our chartist, David McCullock from Share Wealth Systems, likes Bapcor (BAP), an automotive aftermarket parts specialist. Here’s his chartist’s view:
Bapcor reached an all-time high of $6.56 in August 2016, and since then has spent much of its time oscillating between a $5.00 support zone and a $6.00 resistance zone. In early May the stock broke through the resistance zone and marched towards its previous all-time high where it met some temporary resistance once more. As is very common, old zones of resistance once broken often act as future zones of support, which can be clearly seen on the chart.
With support being established at the $6.50 zone, the stock had three attempts to break through another overhead resistance level between $6.80 and $6.90 before finally succeeding. Once again, that level is now providing a zone of support whilst the stock is consolidating. Currently the stock is attempting to break out further to the upside and a close above its new all-time high of $7.10 would be a very bullish sign. For protection, protective stops could be placed below $6.80 or below $6.50 for more conservative Investors.
Dislikes
Michael doesn’t like Tabcorp (TAH), despite last week’s headline turnaround.
Although that was impressive, he believes the underlying business is growing only modestly on a pro-forma basis.
“Potential synergy benefits from the Tatts acquisition are hard to see but in my view reflected in the share price. Happy to sell into the post result rally,” he says.
David doesn’t like Automotive Holdings Group (AHG):
AHG rose from $1.60 at the beginning of 2012 to make an all-time high of $5.00 in August 2016. Since that time, AHG has fallen into a steep downward channel. The lower boundary of the channel recently intersected with a long term support zone, where it immediately bounced from, only to fall and retest at the end of May this year. That support zone, which also represented a 61.8% retracement from its 2012 advance, has now given way and there’s a high probability that the stock could ultimately fall further towards the $2.00 zone and the lower band of the channel.
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