Santos Limited : Fill the gap
By Oscar Salza
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
A$11.85 | A$0 | A$12.4 | +100% |
The fundamentals remain very fragile. The security seems highly overvalued compared to other securities in its sector with a price earnings ratio of 20 times FY earnings estimates and a ratio “EV/sales” of 4.5x.
Graphically, the share is in a period of technical rebound that allowed it to reach the AUD 12.1 mid-term resistance. This area could trigger a sell signal for investors in case of profit-taking. Furthermore, the rallying of the AUD 10.1 support area will be considered for upcoming sessions.
Due to the technical configuration and a bad fundamental situation that does not justify the current valuation of the company, investors can open a short position close to the AUD 12.1 resistance. The price target is set at AUD 11 moving averages’ area, and a stop loss will be placed above AUD 12.1.