Summary
Technically this looks like a great setup. The fundamentals show recent growth and acceleration, but this is and ADR so their financials seem incomplete. It’s interesting that recently Goldman Sachs gave this a sell with a price target of $5.80. From the price action, that doesn’t seem the case. Nevertheless, I should use caution.
The price seems a little too volatile still, but the contractions are getting smaller. Also, it’s pretty close to hitting the channel support, which has initiated bounces in the past.
Stage Analysis
It’s about 6 months into a well-defined Stage 2.
Stage 2 Criteria
| QUESTION | ANSWER |
|---|---|
| Bullish market trend | YES |
| Sector RS outperforming market | YES, Energy is 28.46% above SPX |
| 2x average volume on BO from Stage 1 or leading up to it | YES |
| 30-week MA rising | YES |
| Price above 30-week MA | YES |
| Overhead supply over past 2 years | NO |
| Outperforming SPX | YES |
| Length of previous Stage 1 | 2.4 Years |
Base Count
The first base looks like a base on base. The initial VCP BO, but then failed and fell back into the first base. From there, it made a base reset and BOP successfully the second time. After a 54.78% gain from that BO it’s setting up a second base now.
Base Structure
| QUESTION | ANSWER |
|---|---|
| Identifiable base on weekly and daily | YES |
| Prior up-trend of at least 30% | YES, 54.78% |
Length of base
At least 9 weeks ascending base At least 7 weeks for all other bases | 31 days |
Contain elements of strength:
RS at new high Tight price ranges KO Recoveries | RS is at a new high at end of base, KO Recovery at beginning of base |
Contain elements of support:
Base on top of base Price above 40-week MA | Prior base was a BOB, up weeks have been on big volume and price above 40-week |
| Shakeout near low of base | YES, 3 |
Technicals
VCP needs a little more time to settle down. Contractions need to tighten just a bit more and volume needs to come down. The base is also about to intersect with the channel support. If low volume and contraction match with that, then its more evidence. There still seems to be a bit much OH supply above PoLR.
VCP Criteria
| QUESTION | ANSWER |
|---|---|
| Decreasing volatility from left to right | YES, but needs less |
| 2 – 6 contractions (typically 2 – 4) | YES, 2 but needs another under 10% |
| Each contraction is roughly 1/2 the previous | NO, 17% and 12% |
| Deepest contraction < 50% | YES, 16.86% |
| On right side tight price ranges from high to low of range | YES, but needs to be tighter |
| On right side lowest volume in base | NO, needs to be lower |
| Rising RS as emerging from base | YES, RS at high |
Fundamentals
Earnings
| QUESTION | ANSWER |
|---|---|
| Past 2 quarters EPS growth >= 25% | Last Q was, but no info on the Q before |
| Past 2 quarters margin growth >=25% | Last Q was less, but Q before was big |
| EPS growth >= 25% in past 3 – 5 years | Latest Q was but not previous Q’s data is limited due to ADR |
| EPS surprises | YES |
| EPS break out | YES |
| Annual ROE >= 17% | NO |
| Earnings drift | YES, good ED after latest Q |
