By Peet Serfontein & Jalpa Bhoolia
Listed on the JSE, Tiger Brands is a branded fast-moving consumer packaged goods company that operates mainly in South Africa and selected emerging markets. The core business is the manufacturing, marketing and distribution of everyday branded food and beverages. Many brands under its umbrella enjoy market leader status in South Africa. These brands include All Gold, Koo, Beacon, Albany, Tastic, Ace and many others.
Technically, a price that is at major resistance presents a solid investment opportunity (see the black trendline on the main chart as well as the insert).
Testing a major resistance level is regarded as bullish support, even though resistance is typically seen as a potential barrier to further price increases. Repeated tests of resistance without significant pullbacks can signal persistent demand and a positive shift in investor optimism, thereby hinting at a potential breakout.
The share is in a "markup" phase of the Wyckoff market cycle analysis. This phase is characterised by higher highs and higher lows, often accompanied by rising volume, confirming bullish sentiment.
The share remains above its 200-day and 200-week simple moving averages.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R260, which is the same level at which we have pegged our profit target.
We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share Code | TBS |
|---|---|
| Industry | Food, Beverage & Tobacco |
| Market Capital (ZAR) | 40.54 billion |
| One Year Total Return | 48.89% |
| Return Year-to-Date | 17.49% |
| Current Price (ZAR) | 224.83 |
| 52 Week High (ZAR) | 229.26 |
| 52 Week Low (ZAR) | 136.76 |
| Financial Year End | September |
| The share has made good progress year-to-date, and technical indicators are supportive of further upside. Expect moderate volatility in the share price. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 17.11 | 16.68 | 19.40 | 21.92 |
| Growth (%) | -2.55 | 16.30 | 13.03 | |
| Dividend Per Share (ZAR) | 9.91 | 9.85 | 11.42 | 12.68 |
| Growth (%) | -0.59 | 15.96 | 10.96 | |
| Forward PE (times) | 13.48 | 11.59 | 10.25 | |
| Forward Dividend Yield (%) | 4.38 | 5.08 | 5.64 | |
| Attractive double-digit earnings growth is expected over the forecast horizon. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view:
| Share Name and position | APN - Stop Loss (Close the Position) | EXX - Stop Loss (Close the Position) | NRP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 241.01 | 194.83 | 131.00 |
| Current | 227.45 | 182.65 | 140.53 |
| Movement | -5.6% | -6.3% | 7.3% |
|
Our stop-loss level was breached, and we closed the position.
The shift in trend towards bearish territory is concerning, signalling potential risks ahead. |
Our stop-loss level was breached, and we closed the position.
The strong downside price momentum raises concerns about the potential for further declines. |
An inclining channel pattern remains of interest. Upside price momentum is supportive. The stock remains above its 200-day simple moving average.
Our profit target is R146 with a trailing stop-loss at R134.50. Exit the trade on 9 September 2024. |
| Share Name and position | WHL - BUY (Continue to hold) | DCP - BUY (Continue to hold) | SHP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 60.82 | 34.52 | 292.78 |
| Current | 64.78 | 36.20 | 306.48 |
| Movement | 6.5% | 4.9% | 4.7% |
|
A share that appears to be building a base remains of interest. Crossed just above its 200-day simple moving average. Upside price momentum is a positive takeaway.
Our take profit target is R71 with a trailing stop-loss level at R60.50. Exit the trade on 25 November 2024. |
The stock continues to display higher highs and higher lows and remains above its 200-day simple moving average. Upside price momentum remains supportive.
Our profit target is R39 with a trailing stop-loss at R34.40. Exit the trade on 29 September 2024. |
Low volatility remains of interest. The stock remains above its 200-day simple moving average. Fading upside price momentum, however, is a concern.
Our profit target is at R317, with a trailing stop-loss at R278. Exit the trade on 1 September 2024. |
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