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In this post, I am going to explore few themes that became dominant over the last 3 months in HK equity market.
Technology related sectors (Software, Semis, Internet marketing etc.) dominated the returns in almost all markets globally for a good part of last decade, and had monstrous returns post the Feb-Mar sell off. However, a lot of Tech companies are either consolidating their earlier gains right now or downright breaking down from an uptrend. It is of utmost importance to recognize the shift in investor sentiment.
I won’t talk about banks, airlines and hotels coming back to life as everyone sees these sectors as the direct beneficiaries of re-opening and vaccine related optimism.
Below is a list of select sectors and companies that have been exerting their dominance over the last 3 months. I invite active traders to take a look at graphs of these companies. Try to identify the points where one could’ve/should’ve noticed the changes in market sentiment. For fundamental analysts, this could be a useful exercise to recognize the catalysts which were not accounted for.
That said, this post in no way implies the demise of tech sector. It will probably come back and sooner than most people would expect it to. Aim of this analysis is to maximize the returns one can make at any given time.
Would you rather sit on an investment with say negative to +2% monthly return (given ongoing consolidation in your favorite companies) or find a way to make that capital work for a relatively higher return?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
I highlighted this theme on LinkedIn about 2 months back. It has played out quite well since then and it looks like the party isn’t over yet.
Here are few rocketships:
LUZHOU LAOJIAO (000568.SZ): Paused for a month or so in Sep to mid-Oct and then blasted away. Few observations looking at financials: – Positive trending revenues and EPS – Positive free cash flow – ROIC = 23.57%
Shanxi Fen Wine (600809.SH): Price action on this stock says it all. Stocks like these can make an year’s worth of returns in few months. Fundamentally, it looks even better: – Increasing revenues and EPS yoy – Positive cash flow – ROIC = 32%!
Jiugui Liquor (000799.SZ): Significantly small compared to the previous two companies in terms of revenues and cash flow. ROIC not that great either.
Stock price explosion, however, tells there is something going on here. One on my watchlist for sure!
Charts sourced from aastocks.com; Fundamentals from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
This is a continuation of last week’s post on sectors showing relative strength. You can check out the first batch of sectors here. Below, I have listed out some interesting names in the remaining sectors (Homebuilding, Recruitment, Entertainment & Mortgages).
Homebuilding:
Sumitomo Forestry (1911.T): consolidating in a tight range post mid-Aug gap up.
Sanei Architecture (3228.T): Power gap up on Friday backed by ~7x volume! I feel buying now would be chasing the move. Better to wait for consolidation for couple of days/weeks.
Human Resources: These are very high beta stocks, so need to exercise a lot of caution. UT Group is ~4x and Outsourcing ~3x from March lows.
UT Group (2146.T): consolidating upwards since Mid-September, think this offers a relatively low risk position if it breaches 3865 on upside.
Outsourcing (2427.T): Good to see some consolidation action last week. Ideally want to get 1-3 more days of tight price action near 1015-1030 which can potentially set it up for another leg up.
Movies and Entertainment:
J-Stream (4308.T): this one is a rocket-ship. Fundamentally, I don’t see how this company can run up so much with not so spectacular growth numbers (see below). Nonetheless, this should be on the list for nimble players out there.
Avex Group (7860.T): Quite a beaten down stock, recently came out of a downtrend around mid-September. Not sure if the recent rally is due to short squeeze or fundamental reasons. Technically, the setup is developing and looks very interesting.
Thrifts and Mortgage Finance:
Aruhi Corp (7198.T): This mortgage financier is on a roll, specially given how financial sector has been beaten down globally.
Charts sourced from investing.comand financials from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
I have been studying the Japanese equities market over the last few months and have identified sectors that are exhibiting a positive trend. These sectors warrant a closer look as we could find potential outperformers/multi-baggers.
The broad sectors that I see gaining a lot of investor attention over the course of the last 3 months are: – Agricultural & Farm Machinery – Air Freight & Logistics – Automotive Retail – Footwear – Healthcare Services – Homebuilding – HR – Internet + Direct Marketing – Movies and Entertainment – Multi-line insurance – Specialty stores – Thrifts & Mortgage Finance
Looking at these sectors, one can notice that some of these have been strong since Covid hit in early 2020. But quite noticeable are the sectors which indicate re-opening and economic growth. I will explore some of these below and put together a list of good looking stocks in each sector.
I invite you to do the fundamental analysis and help me choose companies with the best prospects:
Agricultural & Farm machinery:
Kubota Corp (6326.T): consolidating since a big run up just before end-Aug.
Yamabiko (6250.T): Notice that this particular company went on racing upwards even though September was a tough month for most equities.
Air Freight and Logistics: It is a global phenomenon that this sector is getting bid up. Logistics is definitely getting a lot of attention (similar to FedEx in US):
SG Holdings (9143.T): looks a bit stretched right now, keeping an eye on this one when levels become interesting.
Maruwa Unyu Kikan (9090.T): I like the technicals on this one, big volume up days vs low volume down days.
Automotive Retail:
Nextage (3186.T): Something seemingly awesome is happening here, big volume buying, making multi year highs. 3x since April 2020! Is that a bit too much for a business that “provides a range of services in the used car business, including sales of car supplies, insurance contracts, vehicle safety inspection, vehicle repairs after accident, and vehicle purchasing”?
Fuji Corp Miyagi (7605.T): pulling back a bit but still looks bullish. A lot of institutions won’t touch this one given it trades only $400k-$500k a day.
Healthcare Services
Elan Corp (6099.T): Very strong price action, long term uptrend. Business: provides services for rental with laundry service of clothes, towels, etc. combined with supply of daily necessities to persons admitted to hospitals and elderly facilities.
Charm Care (6062.T): another company that helps nursing care business. Although technically I feel it requires some consolidation for a better entry.
Alright, that’s 8 companies across 4 different sectors. Will cover the rest in Part 2!
Hope it’s helpful.
Charts sourced from investing.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
Fair to say that the market seemed to be in a rush today (Nifty +1.6%). Sector split below:
Don’t forget that this is only the 2nd day of rally post the sell off that started last week. Volume on both up days was < volume on down days as shown below. 11302 is a key level to watch, it will guide us whether putting risk back on is appropriate.
Few stocks that seemed interesting today:
Granules: strong price action following the gap up day on Friday. Can potentially use SL @ 380-382.
Vaibhav Global: It’s potentially setting up to breakout higher. Can use SL @ 1800-1780 range. It’s a low liquidity stock, hence more appropriate for retail size.
Garware Technical Fibres: Broke out today from previous highs on strong volume. Can use SL @ 2015.
Tasty Bite Eatables: It got quite beaten down in the sell off and moved below 200 DMA. Today it managed to stay above 200 DMA for 2nd consecutive day which indicates that the downtrend is probably over in this name for the medium term. (SL @ 10510)
Be careful with adding new positions at this time. If you feel you are forcing trades at this time, it is better to sit it out. Highly likely that the trades taken in this environment will be shaken out.
All the best!
Charts sourced from investing.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital. Stop loss levels mentioned are indicative for the risk I would be willing to commit on these trades with my trading style. Everyone’s different, commit what you can stomach losing.
SaaS and Cloud are majorly loved themes globally in these times.
So I have put together a list of such companies in Japan for investors in Asia.
Here we go.
Rakus Co (3923.T): Rakus Co., Ltd. provides cloud and IT engineer dispatch services in Japan.
Growing revenues, decent cash flow (although a decline in 2019-2020 YoY). Investors absolutely love it so far. Can be seen from the chart below. Seems like a low risk bet for investors/traders looking for long exposure.
Atled Corp (3969.T): ATLED CORP. develops software solutions in Japan. It offers Agile Works, an enterprise workflow; X-point Cloud, a cloud workflow system; X-point, a workflow system; and ATLED Work Platform, a multi-tenant cloud application platform with a workflow system. The company also provides support services.
Growing revenues, growing earnings, 15%+ ROE since 2015. Extended as of now, but looks good to add to the portfolio on some consolidation.
I did a similar post for China few weeks ago, that can be accessed here.
Charts sourced from investing.com and financials from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
If one were to look at the WoW performance for major indices, it would be hard to imagine the volatility most investors went through last week.
#SPX: +0.53%
#NDX: +1.25%
#RUT: -0.76%
My model shows massive deterioration in the setups for uptrending stocks. While we wait for the bull market to resume (SPX above 50dma, NDX above 50dma), here are few stocks that one can focus on once the index uptrend is re-established:
$ZM: Zoom needs no introduction. Here is how the chart is setting up. On the fundamental side, it’s really good to see the revenues going 2x in last 12 months and free cash flow 6x.
$CRWD: CrowdStrike Holdings, Inc. provides cloud-delivered solutions for next-generation endpoint protection in the United States, Australia, Germany, India, Romania, and the United Kingdom. It offers 11 cloud modules on its Falcon platform through a software as a service subscription-based model that covers various security markets, such as endpoint security, security and IT operations, and threat intelligence to deliver comprehensive breach protection even against today’s most sophisticated attacks. The company primarily sells its platform and cloud modules through its direct sales team. (Source: yahoo)
$NOW: ServiceNow, Inc. provides enterprise cloud computing solutions that defines, structures, consolidates, manages, and automates services for enterprises worldwide. The company offers information technology (IT) service management applications; and digital workflow products for customer service, human resources, security operations, integrated risk management, and other enterprise departments. It operates the Now platform that offers workflow automation, electronic service catalogs and portals, configuration management systems, data benchmarking, performance analytics, encryption, and collaboration and development tools. (Source: yahoo)
$NVDA: Nvidia is the leading designer of graphics processing units that enhance the experience on computing platforms. The firm’s chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems. In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm’s graphics processing units. (Source: Morningstar)
$ENPH: Enphase Energy Inc delivers energy management technology for the solar industry. The company designs, develops, manufactures and sells home energy solutions that connect solar generation, energy storage, and management on one intelligent platform. Its product and service portfolio consists of Enphase Microinverters, Enphase Envoy, Enphase Enlighten and Apps, Enphase Energy Services, and Enphase Storage System. Geographically, it derives a majority of revenue from the United States. (Source: Morningstar)
Fundamentals look good here. It looks choppy but certainly one to keep an eye on.
$PTON: Peloton Interactive, Inc. provides interactive fitness products in North America and internationally. It offers connected fitness products, such as the Peloton Bike and the Peloton Tread, which include touchscreen that streams live and on-demand classes. The company also provides connected fitness subscriptions for multiple household users, and access to all live and on-demand classes, as well as Peloton Digital app for connected fitness subscribers to provide access to its classes. (Source: Yahoo)
Charts sourced from stockcharts.com and financials from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
