It’s not too often that a stock shakes off the ex-div price adjustment and closes green on ex-div. To get a bit of context on the market’s memory of the stockI decided to go back to the glory days from August 2013 to its ultimate crash in September of 2018. The R240 price was nothing shy of a strong defence line during that period.
Management issued a trading updating expressing intentions of reducing gearing levels. Since then the company reduced its debt levels by an average of 33.5% with the significant portion of that debt reduction coming from the period ending June 2021. The company reported net borrowing reduction of R35.2 billion and brought back dividends. It’s important to note that management achieved this without ever diluting shareholders. .
The stock never saw a daily close above R240 until the close on 21 September 2021 (ex-div) with a bullish engulfing candle. The market gapping down on ex-div but recovering all the dividend amount and then some. Closing at R240.24. Since the breakout from the long base. I’m expecting a fair bit of dancing around between R240 – R245. I’m also expecting the market to remember the R268 level
Above R240 the odds of the stock going back to the R430 highs are pretty good.
I’ve been buying on the up since R163.
With the market closing through R240 by a few cents with a bullish engulfing candle. Adding another purchase of the stock to the portfolio keeping my stop loss at arms Length at R209.42. Expecting the market to remember the R240 level selling off a bit. Once the stock is above R245.80 I will raise stop loss to R225