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Top 3 Trading Ideas For The Week
Tradeable, Tradeable Ideas | 01 October 2014
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By: Tradeable
Articles (256)

While Occupy Central has not affected Singapore much, the stock market seems to have traded sideways since the middle of September, barely budging much in the last week. This could well be due to conflicting economic data coming out from both the US and China, not to mention, Europe as well.

While the Straits Times is holding above its critical support levels of 3,235 – 3,247, there appears to be significant selling pressure as the bulls and bears continue to match each other.

With that in mind, we look at trading ideas that were published on our Tradeable Ideas platform by various traders and research houses. We give our thoughts and two cents as to whether you should subscribe to those ideas.

1. Investing Into Nam Cheong’s RM1.9 billion Order Book

  1. Nam Cheong recently announced contract wins worth US$41 million to two European companies.
  2. The contract wins comes on the back of additional contract wins that has helped to boost Nam Cheong’s order book to about US$580 million.
  3. Nam Cheong’s expansion in Indonesia could also provide a catalyst for stock price appreciation.

Read More>>

What we think: Nam Cheong’s charts look tempting even though it appears to be in a dead cross.

A technical analysis of Nam Cheong

As can be seen in the chart, Nam Cheong looks to be coming over a wave of consolidation after the previous impulse. The 14-day RSI is also rebounding from oversold territory and heading to the neutral zone. I would be watching this stock very closely for possible entry. In particular, a confirmation of a rebound could be seen if a positive candle breaks $0.445.

Be careful though, if the candles turn negative, the stock could well be on an extended downtrend.

2. Biosensors: Downtrend To Continue After Descending Triangle

  1. Descending triangle pattern shows the initial trigger of an overall downtrend.
  2. Increasingly lower highs and constant lows within the pattern suggests sellers are more aggressive than buyers.
  3. Bollinger bands signal Biosensors has been consolidating over the past two weeks.

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What we think: Technicals aren’t the only things that is bogging Biosensors down in terms of stock price. Analysts’ updates have had a hand in it as well. As can be seen in the graph below, a good 80 percent of analysts feel that Biosensors is currently not a worth a Buy rating.

Analysts' ratings of Biosensors International Group

The reason for the particular adverseness to Biosensors seem to stem from a failed acquisition deal by CITIC PE. The fund had previously been in the ropes to take the group private through an acquisition deal. However, the deal fell through with many speculating that adverse issues were uncovered during the due diligence process.

Coupled with relatively muted growth outlook, Biosensors seems to have fallen out of favour in both the technical and fundamental perspective. The long and short of it, you can either sell while you still can, or short the counter.

3. Stamford Tyres: Price Above All Else

  1. Lower gross margins but higher returns from associates meant that Stamford Tyres’s profits still managed to eke out positive growth from the year before.
  2. Stamford’s net asset value per share stood at $0.53 in its latest financial report. This puts the company’s recent share price of $0.36 at a deep discount to NAV.
  3. Other than the high NAV per share, Stamford Tyres also boast low valuation multiples as compared to the industry and sector.

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What we think: Looking at Stamford Tyres’s technical charts however, does not give me much impetus to trade on this counter even though it appears to be relatively undervalued.

A technical analysis of Stamford Tyres

As can be seen in the chart above, the stock appears to be relatively thinly traded. At the same time, the stock has recently into a dead cross. However, there might be some signs of a technical rebound as the 14 day RSI seems to be approaching the oversold territory.

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Nam Cheong  -- -- --   
Business: An offshore marine group specialising in the building of offshore support vessels. [FY18 Turnover] Shipbuilding (59.2%), vessel chartering (40.8%).

Insight: May-19, 1Q19 revenue jumped multiple times to RM29... Read More
Stamford Tyres Corp  -- -- --   
Business: Co is a regional distributor of tyres & wheels with supporting value-added svcs. [FY18 Geographical] S E Asia (81.6%), Africa (6.7%), others (6%), N Asia (5.7%).

Insight: Dec-18, 1H19 revenue inched up 3.2% to $121.7m mai... Read More

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The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

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