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Rotary: Will It Start A Major Uptrend?
Trend Spotting | 18 March 2014
By: Robin Han
Articles (102) Profile

Recently, the market is quite confusing and this makes investment decisions quite difficult: While the US market, which is still going up is a good sign, both the Ukraine situation and QE tapering have increased the uncertainty of the market.

From the technical side, both the US market and the local Straits Times Index (STI) just had an eight to ten percent rebound in February and both indices are at the high-end, which limits the potential profit and raises the potential risk. To balance the risk and reward in this scenario is really not an easy task in terms of investment. One of the solutions is to find some stocks that are fundamentally stable with a good growth. In addition, the technical side of the company must also be attractive in order to time the market better.

It is not easy to find such a stock, but I would like to name a potential one, Rotary Engineering. From the fundamental perspective, the recent financial report released on 27 February shows that the company is stable and growing well: Revenue for the full year period ending 31 December 2013 grew 33.9 percent on yearly basis and profit reversed from negative to positive. As the company was awarded the most transparent company in its category for 2007, 2011, 2012, the data released by the company can be considered reliable.

In terms of potential growth, Rotary has already secured $694 million worth of projects at 31 December 2013, which could easily net a $40 million to $50 million profit for 2014. Of course, while a good result is not guaranteed, the company really stands a good chance to have a nice growth in 2014 with the facts mentioned above.

From technical perspective, the company is also attractive at the moment. The weekly chart indicates that it already finished the long term downtrend and started to go up. The daily chart is indicating a healthy uptrend as both MACD histogram and moving averages are indicating bullish signal. Therefore, the stock may continue the uptrend.

Although the current situation in Ukraine is bearish for oil and gas, one may look out if Rotary can breakout the high for the past few days which will be a confirmation of strong buyer for the short term. If a breakout happens, given the fundamental and technical information mentioned above, Rotary has a good chance to have a nice rally thereafter.

Weekly Chart Of Rotary Engineering

Daily Chart Of Rotary Engineering

Robin Han is a Ph.D in Department of Chemical and Biomolecular Engineering and has got a solid foundation in the financial markets.

Please click here for more information about this author.


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