ARTICLES

Aveng Opportunity

Over the past few years, we have consistently recommended Aveng (AEG) as an opportunity. Those who have followed our advice have more than doubled their money.

By the start of 2022, the company had substantially reduced its debt and completed a 500-for-1 consolidation. These two events have returned the share from being a marginal penny stock to being a solid institutional investment with good prospects. At this stage the company earns two-thirds of its income in Australia from its subsidiary McConnel Douglas – which makes it a rand hedge. In South Africa it has been benefiting from the increased profitability of mining companies as a result of the boom in commodity prices.

In its most recent financials for the year to 30^th June 2021, the company reported headline earnings per share (HEPS) of 2c – which translates to R10 per share after the consolidation. At its current price of R28.33, this puts the company on a price:earnings (P:E) multiple of just 2,83 – which is extraordinarily cheap for a profitable business of this sort which has a turnover of over R20bn per annum.

It has just completed its interim period for the six months to 31^st December 2021 and will probably report in February or March 2022. In the meantime, investors can look forward to a trading statement at some point in the next month or so which will give an indication of where the company expects its HEPS for the interim period to be.

In the meantime, it is worth watching the share’s price and volume charts to see if there is any accumulation of the share going on ahead of the results. Consider the chart:

This chart shows the progress of the share since the consolidation on 7th December 2021. The top chart is a standard candle stick; the middle chart is an on-balance-volume (OBV) chart; and the bottom chart is a volume histogram.

The OBV shows that the share is being steadily accumulated by the “smart money”. A lot of this is probably institutional buying as the fund managers return from their Christmas holidays and realise just how cheap this company really is. Overseas banks like JP Morgan, which now owns 22,45% and Bank of America which now owns 9,64% have been buying as much as they can lay their hands on. They are certainly alive to the fact that, at these prices, Aveng represents a screaming bargain.

So, once again, we suggest that you could do worse than add this share to your portfolio. If you already hold it, our recommendation is that you keep it and perhaps even add to your holding.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

Overbought Oversold

Technical analysis or charting is the study of group investor behaviour. The patterns which exist in charts are derived from the behavioural characteristics of investors acting as a group. For example, the moving average technique exploits the fact that people have difficulty in adjusting their perceptions of value – quickly (If you

US Economy

There has been a debate among international investors about whether the US economy will move into recession as a result of rising interest rates being applied by the Federal Reserve Bank (“the Fed”) to control inflation. The last time that the inflation in America reached these levels was in 1981 and then the Chairman of the Fed, Paul Volcker,

Overview of the Market

The Rand

South Africans will have been watching the steady decline in the rand to below R17 to the US dollar with resignation and some despair. It seems as if our currency is always losing ground, making it more and more expensive to travel overseas while increasing local inflation and especially the price of petrol.

The

Tesla

By opening an Easy Equities account, South African investors can apparently buy shares in Elon Musk’s disruptive American electric vehicle (EV) company, Tesla (TSLA).

As we have made clear in these articles, the world’s share markets are firmly in a bear trend which we think will persist for some time. Despite this, it

JSE Overall Index versus S&P 500 Index

The comparative relative strength index (CRSI) is a very useful indicator. It simply divides one data stream in your software by another and then draws a chart of the result. This enables you to compare the growth in the two data streams against each other graphically. 

Consider the chart:
 

The Anatomy of the Bear

As the bear market unfolds on Wall Street you either hold shares or you are sitting in cash. For those who are holding shares, as we have said consistently, you need to watch your stop-loss levels very closely because you are operating in a market where the odds are decidedly against you.

For those in cash, your position is

Bear Trend

We never regarded the COVID-19 fall of the S&P500 in March 2020 as a bear trend. In our view it was always a technical aberration caused by the “black swan” event of the pandemic. It caused a temporary downward spike which lasted from February to August 2020, but it was never a true bear market.

Then on Monday

Uncharted Territory

The world has entered a turbulent time, the outcome of which will largely determine the future order of things. There are six great areas of uncertainty which the private investor should formulate a coherent opinion on:

• The war in Ukraine is in reality the remnants of the cold war, a low-level conflict

Triple bottoms

Investors should be riveted to the progress of the S&P500 index these days. As we said in our article three weeks ago, the S&P is teetering on the edge of a bear trend. Following that article, the index climbed back up and then on the US Memorial Day weekend it encountered significant

Basic Fundamentals

Public, listed companies are required to report back to their shareholders on a regular basis. They must produce audited financial statements after the first six months of their financial year (interims) and then again at the end of the financial year (finals). Listed companies must produce these statements within 3 months of the end of their