WH Smith PLC : Crossover strategy
By Maxime Nonglaton
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 559 | GBX 0 | GBX 534 | -100% |
The company is low valued as shown by the "enterprise value/revenue" ratio estimated at 0.56 and the PER is at 9.45x. Moreover, analysts polled by Thomson-Reuters have regularly upgraded their earnings per share estimates. Therefore, the consensus expects an increase in profitability and also shows the financial health of the WH Smith group.
Technically, the stock is moving in an upward trend for many weeks. This movement reflects a buyer enthusiasm confirmed also by the well orientation of the moving averages. The security is going toward GBp 560.5 and would give a strong buying signal if the crossover is confirmed in daily closing.
Therefore, investors will benefit from the signal given by the breakout of the GBp 560.5 resistance to take a long position in the stock. The objective will be set close to GBp 587.5 (long-term resistance). Once the position is opened, a stop loss should be fixed under 20-day moving average to guard against a trend reversal.