Sunday, February 26, 2012

More Upside to STVOSV?

STXOSV has risen an astonishing 110% since the bottom of the start of October. This is by far one of the best performing stock in the last 6 months. When I meant best, I meant returns with measured risk

Let's analyse this stock with the news in December that broke and suggested a willingness of its parent, STX, to offload this arm in order to raise funds for itself. It survived that awful call that began a minor plunge in its stock prices before recovering on some speculations that it could be taken over. 
Along these 6 months, news announcements from the company has been mainly positive, with continual orders coming in and a healthy order book. In fact, its order book has expanded greatly. Lately, its financial announcement showed a doubling in its 4th quarter net profits compared yoy.
Given the improvement in the economic landscape and its strategic position in Norway where the OSV demand has clearly been improving, STXOSV has good and strong fundamentals, tested along the way in these 6 months.

On a technical analysis perspective, its share price has been largely correlated with its news. The share price strength was clearly tested in December on news that STX would be looking to offload this lucrative unit. It has not looked back since. Its price has seen a healthy increase since October and the trendline is very well defined. On Friday, the stock just rebounded off the diagonal trendline support.
MACD is however a bit weak given its crossover with its signal line but if you are looking to trade off the support, it should not be too big a concern given MACD and its signal are still both in the positive territory. Alternatively, it could be interpreted as the stock taking a breather from its rapid rise 1 week back so do track closely and look out for the first and second green MACD bars to initiate a long.
RSI is around 70 confirming the stock's price strength and has bounced off a horizontal support at around 65.
Bullish with mid term outlook.

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