The share has been severely punished after the contact of the upper limit of the bullish trend line also corresponding to the mid-term resistance at GBp 2031. However, it has positively reacted on the lower limit of the bullish channel, rebounding towards the GBp 1949 resistance.
Fundamentals of the company are very strong. Indeed, Surperformance rating emphasize the profitability with a net margin of 5.32% and an operating margin of 8.68% estimated for this year. Also, both in terms of earnings release quality and business predictability, the group gets excellent grades by our rating system. Eventually, EPS and revenue estimates are constantly revised upward by analysts from Thomson Reuters.
Graphically, the stock shows a V-bottom configuration with a slight pull-back around GBp 1888. This technical pattern should rapidly lead the security towards the GBp 2031 resistance.
Thus, taking into account good fundamentals and the technical pattern forming, investors could buy the stock above the short-term resistance to aim GBp 2031 firstly and the upper limit of the bullish channel secondly. A stop loss will be set below the effective entry point.
Associated British Foods plc is one of the largest European food processing groups. Net sales break down by family of products as follows:
- grocery and bakery products (21.3%): tea (Twinings brand), oils (Mazola and Capullo), spices (Spice Islands and Durkee), jam, bread, biscuits, sauces, etc.;
- sugar (12.9%): Silver Spoon, Billington's brands, etc.;
- ingredients (10.9%): yeasts, flavorings, emulsifiers, sterols, esters, etc.;
- processed food products (10.1%): mainly cereal and animal feed.
The remaining sales (45.6%) are from clothing distribution (408 outlets located mainly in the United Kingdom, Ireland, Spain, Germany, the Netherlands, and Portugal under the Primark and Penneys names).
Net sales are distributed geographically as follows: the United Kingdom (36.8%), Europe and Africa (38.2%), Asia/Pacific (12.7%) and Americas (12.3%).
ASSOCIATED BRITISH FOODS PLC 
