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Home / Trade Alert / Buy – GKN (GKN)

This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

Buy – GKN (GKN) - 28 June 2016

Trade Parameters

  • Opening Price: 261.1p
  • Stop Loss: 245p (16.1p/6.2% below)
  • Profit Limit: 300p (38.9p/14.9% above)
  • Reward vs Risk: 2.4x
  • CFD Margin: 10% (subject to change)

Observations – For

  • Bounce off 3yr support
  • ADX (trend strength) on the rise
  • RSI rising lows

Observations – Against

  • Bearish cross by Directional Indicators
  • No Point & Figure chart reversal
  • Moving averages around 280p may be resistance

Analyst Comments

The shares are in a 10-month sideways channel and have recently bounced off the floor. Potential for the ceiling to be revisited, helped by a return of more bullish sentiment post-Brexit. Have the shares seen their worst levels after the referendum? Do they offer recovery potential? The shares could attract interest in run-up to end-July Q2 results if expectations are positive. Risk involves the company’s exposure to any car industry slowdown and any protracted Brexit uncertainty.

Brokers are very positive on the stock, suggesting the recent sell-off offers an interesting entry level. This is bolstered by the fact that 93% of  target prices suggests upside potential, 77% of targets are beyond our 300p trade objective and the consensus target still offsets potential upside of 28%.

Next Event: Q2/H1 results, 26 Jul

Latest Broker 12-Month Consensus:  72% Buy, 22% Hold, 6% Sell (full breakdown on request)

Source: DowJones Newswires, Reuters News, Bloomberg  or Company Press releases

Broker Ratings & 12-Month Target Prices (Bloomberg)

2-year (daily) - Stochastics, Directional Indicators, RSI, Momentum

Share 1wk 1m 3m 6m 1yr 2yr 3yr 4yr 5yr
Perf % -11.9 -7.3 -10.5 -17.0 -27.0 -31.0 -16.3 44.6 17.4
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