Back in February, I posted an image with quotes from Michael Covel: Trading is a waiting game. You sit, you wait and you make a lot of money all at once. And, for the month of Mar, I would like to share a quote from Warren Buffett: The stock market is a device for transferring money from the impatient to the patient.
The commonality between the two beautiful quotes is that Patience is utmost important in trading or investing. The amount of hard work combing through financial reports for opportunities or red flags and charting the particular equity/stock/counter for entry/exit trading plan goes a long way. Once a position is initiated, what is left behind is patience. Bitter it may be but its fruit is always sweet. Hence, Cash and Patience is King at the end of the day.
With that, I would like to share Parkson (5657) which is famous for its brick and mortar retail business and decade long decline share prices. Unfortunately, no one dares to touch Parkson due to its declining business and share price. Is it really that bad or is there something in Parkson that is worth taking calculated risk and wait?
Fundamental analysis:
In this analysis, I have added AEON and PADINI for comparison with Parkson as both are considered to have huge presence in terms of retailing business. As there are many factors to be considered with regards to fundamental analysis, my personal pick is the net cash on hand as it represents the ability to sustain the business. The growth in e-commerce has definitely challenged the brick and mortar retailers to rethink their business model. Based on the data in Image 1 below, Parkson has the highest net cash position and considered to be cheap (at current price) from valuations perspective.
Technical analysis:
Personally for me, the decline is within the wave 3 of major bearish trend (Image 2) and has yet to break to a new low. Recent development of its price actions which is a mini rounding bottom (Image 3) observed may have supported the earlier projection of wave 3 completion. If this is true, we should be expecting a wave 4 which is a correction to the major bearish trend (Image 3). Wave 4 formation should be a rounding bottom as well.
Fundamental analysis:
In this analysis, I have added AEON and PADINI for comparison with Parkson as both are considered to have huge presence in terms of retailing business. As there are many factors to be considered with regards to fundamental analysis, my personal pick is the net cash on hand as it represents the ability to sustain the business. The growth in e-commerce has definitely challenged the brick and mortar retailers to rethink their business model. Based on the data in Image 1 below, Parkson has the highest net cash position and considered to be cheap (at current price) from valuations perspective.
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| Image 1: Net Cash and Book Value per Share |
Technical analysis:
Personally for me, the decline is within the wave 3 of major bearish trend (Image 2) and has yet to break to a new low. Recent development of its price actions which is a mini rounding bottom (Image 3) observed may have supported the earlier projection of wave 3 completion. If this is true, we should be expecting a wave 4 which is a correction to the major bearish trend (Image 3). Wave 4 formation should be a rounding bottom as well.
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| Image 2: Wave count projections for Parkson (5657) |
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| Image 3: Mini rounding bottom observed for Parkson (5657) |
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| Image 4: Rounding bottom projection of Parkson's Wave 4 |
The price actions following the completion of the first mini rounding bottom pattern (Image 3) will be slow and maybe subjected to frequent interruptions to the extend of tiring out the impatient investor, but there is a possibility of yielding eventually a significant profit. This counter is not suitable for trader hoping to trade for short term gain. I prefer to keep this in my portfolio for a longer period of time. I will be on the lookout for potential upside to $0.45 cents and a breakout beyond this level with high volume will bring it further to $0.65 cents.
Disclosure: I have been holding Parkson since 2018 and the analysis above is based on available data extracted from sources believed to be reliable at the point of writing. I have no business relationship with Parkson and the information above is purely my own opinions. Please do your own due diligence as this is not a recommendation to buy.
Good luck and all the best!!!
Good luck and all the best!!!
Indeed this is an interesting article. From the above analysis, Parkson is a potential stock for long term investment.
ReplyDelete@Unknown, thank you for your compliments. If you believed this is insightful, do share with your friends as well. Above is just my opinion and you should do your own due diligence before initiating a position. If your decision is to initiate a position, do take note that the price actions will be slow as I have explained in the article above (2nd last paragraph).
ReplyDeleteGood luck and all the best!!!
Congrats to all that bought Parkson. Nevertheless, as I mentioned in the article above, the price action will be slow. Hang on to it until it triggers your rate of returns, stop loss or the TP above.
ReplyDeleteThank you for your patience. Parkson activities increases for the last one week which is a good sign. Watch for breakout above $0.30 cents which will bring it higher and close to $0.45 cents. Looking forward to review its next quarter report. Some of you is sitting on top of 13% gain for Parkson and its definitely a very good entry at your price. Continue to hold on to it until it triggers your rate of returns, the TP above or if it triggers your stop loss.
ReplyDeleteGood luck and all the best!!!
Some of you asked me what's next for Parkson. As I mentioned in my article, the price actions will be slow😊 Now, the short term price actions is showing another possible bottom for Parkson with the inverted head and shoulder bottom formations.
ReplyDeleteDo monitor the price actions closely if you intend to add/initiate positions. If it is building an inverted head and shoulder bottom, the next bottom for Parkson should be at the range of $0.24+/-0.005. You can use $0.22 as your stop loss level.
Good luck and all the best!!!