Journey to Wealth
Highlights / Stock Picks of the Day - Chemical Company of Malaysia ("CCM") - BUY
Not too long ago, we recommended that traders TAKE PROFIT on CCM's stock following a furious four-day run-up that saw the share price advance 16.7% from RM1.08 (report dated 7th March) to RM1.26 (11th Mar). Our decision to cash in the chips turned out well, and the share price subsequently corrected to recent low of RM1.14. Yesterday, the CCM yet again presented to us a 'buy' signal. The share price has broken out of a "Bullish Flag" formation, which signals a continuation of the prior uptrend. Trading volume was also higher, and we reckon that the share price is poised for further gains towards the RM1.28/30 resistance level, and potentially the "Flag-pole" measurement objective at RM1.60 (Target 3 bids lower at RM1.57). Traders looking to buy into the stock should also place a stop-loss at RM1.11.
Source: Kenanga
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Be the first to like this. Showing 2 of 2 comments
Kianlim,why your statement is quite contracdic? first you try to complaint, end up, buy it
2013-04-23 19:57
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kianlim2004
Kiasutrader, your prediction is baseless, this company CCM
manufactures mostly fertilizers and chemicals which are price
sensitive. It is a cyclical stock. If share price is RM1.20, its
PE ratio is 15, which is an average. Its long term prospect is
slow due to its high debt level of RM$550 million. If it is
only making something like RM50 million per year, then it will
take a long time to pay back the debts if it opted to maintain
a 5% dividend payout ratio. Its share price will stay like this
only until it can substantially increase its profits. Also, it
does not have freehold lands which is a plus to have if you are buying shares for long term investment. At least the land can increase in value over a long period of time. But for this company, all its fixed assets must minus depreciation over time, which reduces the real value of its assets. In my opinion, for the price of this stock to shoot up to RM$1.60 is quite possible!
2013-04-13 20:09