RWE AG : A breakout is expected
By Sébastien Gatel
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
€11.43 | €12.7 | €10.8 | +11.16% |
The attractive valuation of the company is a real advantage for the share. The latter is currently valued 0.4 times its sales for 2015 with a P/E ratio of 3.58x for the same period. Net earnings per share are expected in a strong growth in fiscal year 2015 to 3.19 EUR (+ 13%). Thomson Reuters consensus also expects an average target price of EUR 13.1.
Rooted in a long-term downward trend, RWE stock has nevertheless rebounded in recent months in contact with the EUR 10.2 short-term support. This recovery has create an accumulation phase between EUR 10.28/12.7. Consequently, volatility fell sharply but the volumes detected in recent sessions provide arguments for a rise of the stock.
Therefore, the more aggressive buyer will open a long position, given the graphical configuration and solid fundamentals. A breakout of the triangle pattern would give a buy signal with the EUR 12.7 resistance as a target.
A stop loss will be positioned below the EUR 11 (trendline).