NOW SHOWING: THE TRILOGY OF FAST & FURIOUS SHOWS PART 13 (updated 8 ) ---
2 - TOP PICKS POSITIVE MOMENTUM STOCKS IN KLSE
Momentum Trading – How to Find Top Performing Stocks
Chasing high-performing stocks, buying high and aiming to sell higher, is known as momentum trading. Momentum stocks are those with long-term uptrends, typically over a period of three to 12 months, with consistently high rates of return over the same period.
Momentum vs. Value
The theory underlying trading momentum stocks differs fundamentally that governing trading value and growth stocks. Value stocks are identified by finding stocks whose current worth are higher than their current prices, while growth stocks are those for which the current price does not reflect future value. For both value and growth stocks, the objective worth of the company the stock represents is essential to determining at what price to buy. For momentum stocks, on the other hand, the value is irrelevant – the assumption is that the value of the stock will continue to increase according to its current trend, at least in the short term.
Momentum trading has historically outperformed value-based trading while the uptrend continues. Take, for example, the tech boom of the 1990’s, when technology stocks vastly outperformed the market up until the momentum collapsed. However, momentum trading is necessarily short-term since it requires frequently moving capital from stocks whose momentums are petering out to those who are beginning to heat up. Thus momentum trading involves placing a much larger number of trades than value-based trading, which in turn can incur additional trading fees and be disadvantageous from a tax standpoint.
Typically, momentum stocks are performing at their best when the market as a whole is pushing towards new highs. In this case, investor sentiment tends to be optimistic and numerous stocks are setting continuous uptrends. When the market is nearing its bottom, on the other hand, value stocks are a better trading choice. While momentum stocks may exist, they will be less common across a bear market and many dependable stocks are likely to be undervalued relative to their objective worth.
Momentum Stock Criteria
Identifying momentum stocks within the broader market is the first step in momentum trading. There are several distinct criteria that can be used, either separately or in combination, to narrow down trending stocks to those truly experiencing momentum. The best way to apply these criteria is through a stock scanner that will return a small list of potential momentum stocks that can be further analyzed before trading.
Earnings Growth
One of the characteristics common among momentum stocks is that they consistently report growing earnings-per-share and revenue. Many momentum stocks also tend to outperform analyst predictions when earnings reports are released. To find stocks with accelerating earnings, scan for stocks whose earnings-per-share have increased quarter-over-quarter for the past year and whose most recent earnings-per-share was significantly higher than for the same quarter last year.
High Returns
Since momentum stocks tend to outperform the market in the short-term, a simple method for identifying potential momentum stocks is simply to scan for stocks that are yielding higher returns over the past three, six, or 12 months than the S&P 500 or another index. A first pass scan is likely to yield a large number of stocks, which can then be narrowed down by repeatedly removing the bottom 10% until the list is short enough to investigate each stock further.
Positive Short-Term Averages
When a stock is consistently trending upward – as a momentum stock should – its short-term moving price averages should consistently be higher than its long-term moving price averages. Thus, it is possible to identify momentum stocks by scanning for those whose averages are stacked according to their timespan. In practice, this could mean searching for stocks where the 10-day moving average is greater than the 50-day moving average, which in turn is greater than the 100-day moving average.
Setting New Highs
Another outcome of the consistent uptrend characteristic of momentum stocks is that the stock will be frequently setting new highs, only to break those highs by moving even higher. The key here is determining how your trading plan matches with the period of the highs. For day trading, for example, momentum stocks that are continually breaking their four-day highs are more appropriate targets for momentum trading than stocks that are breaking their 20-day or 55-day highs.
Conclusion
Momentum trading can be quite risky since it is rarely clear for how long a stock’s momentum will last. Choosing your entry into a position wisely is critical since the decelerating momentum can quickly ruin a momentum trade and the reversal can be severe if the stock is considered overvalued at the end of its uptrend. When searching for momentum trades, it is often better to establish positions in stocks whose momentums are just maturing rather than those whose momentums may be ageing. Typically, it is best practice never to hold momentum stocks overnight once the momentum appears to be waning.
However, when used in concert with a broader trading plan, momentum trading can be a viable and profitable strategy. An example is to use momentum as a factor in discriminating among value stocks to invest in or for determining entry and exit points for a value stock. In addition, momentum can be used as a short-term strategy in the broader context of long-term value-based strategy. However you choose to apply momentum trading, it is important to understand the difference between momentum-based and value-based investing and to be able to recognise and find stocks that have momentum.
But for me, I like to trade bullish chart patterns (like Ascending Triangle, Bull Flag, buildup at Resistance, etc.) in an uptrend.
1. It will be good to put KGB Warrant inside your favourite watch list for buy orders on the
KGB Warrant as it behaves almost identical pattern as Comfort Warrant WB
Analysis on Comfort Warrant WB
1.1 Comfort Warrant , WB
first day of listing 6 July 2021 / limit up RM 0.305
1.2 From 6 July 2021 (1st day ) to total another 13 trading days -- to 26 July 2021/ RM 0.745
total gain from RM 0.305 to RM 0.745 =RM 0.44 that translates to 145 %
July 2021
1.3 . 1 /1st day / 6 / limit up RM 0.305
2 / 2nd day 7 / closed RM 0.39
3 / 3 rd day / 8 / closed RM 0.39
4 / 4th day / 9/ closed RM 0.415
5 / 5th day / 12 / closed RM 0.385
6 / 6th day / 13 / closed RM 0.395
7 / 7th day / 14 / closed RM 0.40
8 / 8th day / 15 / closed RM 0.47
9 / 9th day / 16 / closed Rm 0.465
10 / 10th day / 19/ closed RM 0.47
11 / 11th day / 21 / closed RM 0.595
12 / 12th day / 22 / closed RM 0.665
13/ 13th day / 23 / closed RM 0.71 ( high RM 0.74 )
14 / 14th day / 26 / closed RM 0.64 ( high RM 0.745)
2. Pls note from the technical analysis of KGB Warrant , WB :
it will behave as the same positive manner to at least
Target Price : RM 0.60 to RM 0.745
short term , possibly by 19 Aug 2021 with potential gains from
RM 0.305 to RM 0.60 = RM 0.295 / 98 %
RM 0.305 to RM 0.745 = RM 0.295 / 145 %
2.1 1st day of listing / 3 August 2021 / Limit up RM 0.305
2.2 2nd / 4 August 2021 / low RM 0.305 / high RM 0.385 / closed RM 0.315
2.3 3rd day / 5 August 2021 / low RM 0.305 / high 0.355 / closed RM 0.35
2.4 4th day / 6 August 2021 / low RM 0.34 / high RM 0.42 / closed RM 0.40
KGB has clinched another job win, this time from GlobalFoundries which recently allocated US$4b to expand its wafer fab in Singapore. The award is worth RM45m for a base build specialty gas delivery system and work will commence immediately as the customer is seeing an urgent need to increase its 12-inch wafer output up to 1.5m per year (+43%) due to swelling chip demand. This brings YTD order wins to RM264m while order-book stands at RM523m. We believe this is the start of more fab expansions to come, indicating a slew of jobs in the pipeline for KGB.
Maintain OUTPERFORM
with a higher
Target Price of RM1.50.
Just the start. Kelington Group (KGB) made an announcement yesterday indicating another UHP (ultra-high purity gas delivery system) job win, this time from GlobalFoundries’ wafer fabrication plant in Singapore. This award is worth RM45m for a base build job relating to the specialty gas delivery system and work will commence immediately as the customer is seeing an urgent need to ramp up capacity due to swelling chip demand. We are very positive on this development as it strengthens our belief in KGB’s competency and competitive edge among peers given that the group managed to win this contract in a short span of time, merely one month after GlobalFoundries announced its US$4b capex plan to build a new wafer fab. Including the recent award, KGB has secured RM264m job wins in 2021 while its order-book has ballooned to RM523m.
More to come. We observed that larger wafer fab players such as TSMC and SMIC have started their capex plan early in the year, while medium sized players are only starting to execute their capex plans now and can no longer hold back as the gap between surging demand and available capacity continues to widen. This indicates that we can expect more wafer fab expansion to come and KGB is in a favourable position to benefit from more UHP jobs, in line with management’s goal to achieve another year of record job wins. The group’s tender-book has jumped to RM1.5b, a sharp increase of 50% from the RM1b usually reported by them. This is likely driven by strong demand for semiconductors as our channel check shows that laptop manufacturers are still experiencing chip supply that are 25-30% below demand while automotive semiconductor companies are locking in wafer orders with non-cancellation clauses for up to 24 months.
Braving through the MCO challenges. Despite running at 60% workforce restriction in its Malaysia operation during the MCO 3.0 period, we are hopeful for the 2QFY21 result to remain stable QoQ as UHP jobs in China have been running smoothly and would likely be able to offset the MCO 3.0 impact. Note that China contributes c.48% of the group’s order-book.
Maintain FY21E-22E earnings of RM31.1m and RM35.6m, representing growth of 78% and 14%, respectively.
Maintain OUTPERFORM with a higher Target Price of RM1.50 (previously RM1.30), based on rolled forward FY22E PER of 26x, representing 15% discount to peers’ average.
Risks to our call include: (i) slower revenue recognition due to Covid-19, (ii) downturn in semiconductor sales, and (iii) delay in liquid CO2 ramp up.
An official blog in I3investor to publish research reports provided by Malacca Securities research team.
All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my
Kelington Group Bhd’s (KGB) wholly owned subsidiary, Kelington Engineering Pte Ltd has secured a contract valued at RM45.0m for the specialty gas systems distribution works for GlobalFoundries Inc.’ new semiconductor fabrication plant in Singapore.
The contract is for a period of 12 months commencing on 18th August 2021 and is expected to be completed by July 2022.
The Ultra High Purity (UHP) contract secured marks the sixth major contract wins for KGB year-to-date, bumping its orderbook replenishment to RM264.0m (inclusive of smaller scale projects). This represents 58.7% of our orderbook replenishment target of RM450.0m for FY21f.
Following the latest win, we reckon that jobs flow may continue to garner pace in subsequent quarters that will be uplifted by gradual recovery of business activities, coupled with the strong demand in the semiconductor sector.
The move will also be supported by the approximately
RM1.50bn worth of tenderbook.
Although the local operations will experience minor impact from the implementation of Full Movement Control Order (FMCO), a recovery is largely in sight as operations are expected to gradually resume in coming months. Meanwhile, the stronger billings from the Ultra-High Purity segment for projects in China and Singapore may continue to anchor growth over the foreseeable future.
On the global scale, the solid global semiconductor sales continue to demonstrate improvement, rising 29.2% YoY to USD44.5bn in June 2021 implies that the aforementioned sector outlook is on the boom amid the rising adoption of Internet of Things (IoT) and technology evolution into 5G. Hence, we reiterate our stance on KGB as one of the key beneficiaries to leverage on the semiconductor equipment players expansion plans in addressing the global chips shortage.
Valuation & Recommendation
We made no changes to our earnings forecast, given that contract secured falls within our orderbook replenishment assumption. Therefore, we maintained our BUY recommendation on KGB, with an
unchanged target price of RM1.37,
pending the upcoming 2QFY21 results release, tentatively on next week.
Our fair value is derived by assigning targeted P/E multiple of 30.0x to FY22f EPS of 4.6 sen. The assigned P/E multiple is in line with valuations of the technology sector that is trading at 30.5x for 2022.
Risks to our recommendation and target price include weaker-than-expected targeted orderbook replenishment of RM450.0m for both FY21f and FY22f respectively. Any decline in semiconductor sales may dampen the large scale UHP projects delivery to China and Singapore, given that the UHP segment plays a major part in total revenue contribution and earnings growth
In the financial , stock market theme in US is the technology sector ,
Nasdaq with the 52 weeks , low is 10,519 points and the high is 14,896 points , the closing for 6 August 2021 is near the historical high ,
14,836 points and now KLSE - technology stocks in
Technology sector enjoy positive momentum ,
and the spillover strong positive effects included
3. KGB / 0151 Warrant for Technical / Trading Buy
3.1 KGB /0151 , one of their key business is
UHP DELIVERY SYSTEMS
We serve industries that require ultra high purity (UHP) gases and chemicals in specialized applications. Having a strong understanding of the unique characteristics of these specialty gases and chemicals, we engineer solutions that ensure safe handling of the delivery and distribution of these substances all the way from source to equipment to waste disposal.
The use of gas purification and abatement technologies are critical to ensure that gases fed into the UHP delivery system are of specified purity level, while the waste gases produced as a result are treated accordingly prior to disposal.
We have the complete solution for UHP gas purity monitoring
Ultra-high purity (UHP) gases are essential for semiconductor manufacturing and the production of electronics such as LED and LCD displays. We provide a single-supplier solution for all UHP measurements in these applications.
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Nasdaq - Big Gainers
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(i) NVIDIA CORPORATION = 4 January 2021 / USD 131.14
6 August 2021 / USD 203.66
+ USD 72.52 translate to 55.30 %
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(ii) NXP SEMICONDUCTORS /NXPI= 5 January 2021 / USD 165.67
THE ABOVE IS NOT A BUY OR SELL CALL AND IS ONLY A PERSONAL OPINION, WRITTEN AS ARTICLE FOR SHARING PURPOSES TO KLSE COMMUNITY MEMBERS.
DISCLAIMER: Investment involves risks, including possible loss of investment and other losses.
This article and charts are provided for information only and should not be construed as a solicitation to buy or sell any of the instruments mentioned herein. The author may have positions in some of these instruments. The author shall not be responsible for any losses or profits resulting from investment decisions based on the use of the information contained herein. If investments and other professional advice is required, the services of a licensed professional person should be sought.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
