The level to overcome in order for a stock to start for a potential upside of 200%. This is the challenge faced by El.En, a company that has suffered from the Covid emergency, but which has nevertheless maintained good results in the first half of 2020. Suffice it to say that, despite a sharp decline in revenues, it closed the half-year with a profit and a positive net financial position of 33.5 million euros.
According to analysts’ recommendations, the average consensus is Buy, buy now, with a target price that expresses an undervaluation of over 20%. This level of undervaluation is consistent with what is obtained by comparing the fair value, calculated with the discounted cash flow method, and the current prices. By using the market multiples method, the situation is more interesting. In fact, El.En is undervalued by about a factor of two compared to its competitors. Theoretically, therefore, the prices could double their value.
Where, according to the graphical analysis, is the level to overcome in order for a stock to start for a potential upside of 200%?
The title The. (THOUSAND: ELN) closed the session on 17 September unchanged with respect to the previous session, at € 22.15.
Daily time frame
The current projection is bearish and points towards the objectives indicated in the figure. However, it should be noted that for the bulls the effort to reverse the current trend is not huge. In fact, a daily close of more than € 22.688 would be enough to turn the current trend upwards.
El.En: bearish projection in progress on the daily time frame. The red oblique lines represent the Running Bisector levels; the horizontal lines the levels of The New Law of Vibration. The volume for each price level is shown on the left. The middle panel reports BottomHunter’s signal. The minimum on the considered time frame is marked when it is equal to 1. The lower panel shows the volume traded for each bar compared with a 20-period zero lag exponential moving average.
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Weekly time frame
The current trend is bullish and is facing important resistances, overcome which the prices could literally explode to the upside. Looking at the figure, in fact, we notice that since the end of May, prices have been fighting with resistance in the 23.743 euro area. Once this level is broken, the doors would immediately open for reaching the first price target in the 30.941 euro area. This would be the first step of a bullish path that would lead to the II and III price targets in the 38.3 euro and 66.1 euro area, respectively. In the latter case, the stock would have a potential gain of 200%. Note that the ongoing rally is supported by a BottomHunter signal.
Given that descents to the € 19.566 area are compatible with the current rise, only closures below this level would reverse the current trend downwards.
El.En: bullish projection in progress on the weekly time frame. The red oblique lines represent the Running Bisector levels; the horizontal lines the levels of The New Law of Vibration. The volume for each price level is shown on the left. The middle panel reports BottomHunter’s signal. The minimum on the considered time frame is marked when it is equal to 1. The lower panel shows the volume traded for each bar compared with a 20-period zero lag exponential moving average.
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Time frame mensile
Even in the long term, the current trend is bullish and aims much more ambitious goals than on the weekly time frame and which are indicated on the following chart. The only condition for the trend to remain bullish and for the objectives to be achieved is the holding of the support in the area of € 22.15 at the end of the month.
El.En: bullish projection in progress on the monthly time frame. The red oblique lines represent the Running Bisector levels; the horizontal lines the levels of The New Law of Vibration. The volume for each price level is shown on the left. The middle panel reports BottomHunter’s signal. The minimum on the considered time frame is marked when it is equal to 1. The lower panel shows the volume traded for each bar compared with a 20-period zero lag exponential moving average.
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Deepening
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