Wind at the back.
Mr Price was one the companies that came out on the other side of the pandemic stronger than most. The company made two notable acquisitions in Yuppiechef and Power fashion. The company issued a trading update on the 7th of August. Retail sales were up 48.8% (38.6% excluding Yuppichef and Power fashion) in the quarter. The investments are seemingly proving to be good investments.
The stock was defended by the 200 month EMA holding it well. Coming back above the 50 day EMA as well.
Zooming into the weekly chart.
We have a golden cross on the weekly chart. The corrected back to around the 50 week EMA. Holding the R198 which the stock held after the correction. Violating the trendline slightly. But not by very much.
Let’s look a bit closer.
The stock has a bullish divergence at the stock is repelling from the 200 day EMA. If the stock can come back above R205 without making a new low. The stock provides a great opportunity with a tight stop around R196 just below the 200 day EMA. The odds for a strong rally are greater above R240. That rally would be backed by further growth in retail sales as we go into the festive season. We’ll see the cash flow from the acquisitions particularly the Power fashion investment. Possible debt reduction or better yet dividends back to shareholders.
Given the bullish divergence and the strong fundamentals from the company we’re likely to see a turn in the stock coming back above the uptrend support challenging the 50 day EMA, then test of the support from above. Great buy at these levels from long term investors for short term traders rather waiting for the trend line to become support again before buying in the stock. With a short term target of R240.