Travis Perkins is back on its support area and this represents a strategic entry point.
The British builders’ merchant and home improvement retailer shows good fundamentals. The company said recently that sales are up for the third quarter. According to Surperformance ratings, its profitability in 2014 should improve as the margins’ growth shows. It should be at 5.74% in 2016 against 5.01% for the current year. To date, P/E ratio for 2014 is estimated at 13.87x and at 12.1x for 2015. The company is valued 0.76 times revenues estimated for this year. This ratio should be taken into consideration by investors. Moreover, UBS cuts its price target to GBp 2000, buying the security. Also, analysts’ consensus regarding the average target price is set at GBp 1890, which represents a huge gain opportunity.
From a technical point of view, the area of the GBp 1574 support should enable the stock to have a new bullish trend. The long term support in this area tested several times confirms its relevance. Technically, above these levels, 4-traders analysts are optimistic and count on a return toward the short and mid-term resistances, knowing GBp 1647 and GBp 1720 levels.
As a result, active investors can take immediately a long position in Travis Perkins thanks to the close proximity of the GBp 1574 support area. The target price is GBp 1648 and in case of breakout of this level, the second target price would be GBp 1720. If there is a breakdown of the support, investors should close their positions, setting a stop loss around GBp 1550.
Travis Perkins plc is a distributor of building materials in the United Kingdom. Its Merchanting segment includes brands, such as Travis Perkins, BSS, Keyline, and CCF. Travis Perkins is a general merchant, offering a destination for heavy side products, complemented by light side convenience. BSS supplies commercial and industrial heating and cooling solutions, supplying specialist contractors with a variety of products from 69 branches and two distribution centers. CCF distributes insulation and interior building products from 36 branches to contractors throughout Great Britain. Keyline supports housebuilders, groundworkers and infrastructure contractors to build and redevelop facilities. Its Toolstation segment is a supplier of a range of products to trade, do-it-yourself customers. Toolstation operates from 570 branches across Great Britain and is growing in the Netherlands, Belgium and France. Its product mix includes plumbing and heating, heavy side, light side, and timber.
TRAVIS PERKINS PLC 
