From a high of S$2.90 on 11 July 2019 (which is the company’s current 52-week high), ComfortDelGro’s share price have since went on a downward descend to a low of just S$1.96 at the time of writing (on 04 March 2020) – a drop of 32.4% in a space of 7 months in about 8 months.
Given that the share price of ComfortDelGro have dropped below S$2.00, I have received quite a number of questions over the past couple of days seeking my advice on whether it is a good time for them to buy into the company now.
As such, I’ve decided to do a technical analysis of the company and share with you what I think about the company’s share price movements in the near-future (both positive as well as negative) in my post today.
Overview of the Company’s Share Price Movements
The first thing I usually do is to look at the company’s share price movements over the years (the period I’m looking at in this post is between February 2010 and March 2020.)
To help you better understand the company’s share price movements over the years, I’ve inserted arrows to denote its share price movements (blue arrow means uptrend, red arrow means downtrend, and black arrow means the share price is moving in a range):
As you can see from the chart above, over the years, the share price movement of ComfortDelGro does not move in one singular direction, but rather in a series of ups and downs denoted by the arrows.
Drawing of the Various Support/Resistance Lines, along with Trend Lines
Next, I’ll look at its share price movements and identify the possible support and resistance lines, along with uptrend and downtrend lines:
From the above, the various support/resistance lines I’ve identified are at the following price points (from highest to lowest):
How is ComfortDelGro’s Share Price Going to Move in the Near-Term?
After identifying the support/resistance lines, as well as uptrend/downtrend lines, the next thing I’ll do is to zoom into the company’s most recent share price movements to determine how it may possibly move in the near-term:
Looking at its candlestick movements for the past 4 days, including the current day (I’ve highlighted this in a black rectangular box above), it seems to me that the downward drop seem to have paused (for now), as the share price has been moving around the support line at S$1.95. Also, looking at its MACD and RSI below, it seems to me that the share price may be bouncing up in the near-term.
If the share price does indeed bounce up, then it is possible that it may climb back up to the resistance level at $2.21.
Having said that, however, I am not completely ruling out the possibility that the bears may just be taking a pause for now at the S$1.95 support line, and break below this support line shortly after.
In the event that the share price breaks below this S$1.95 support line on a high volume, then there’s a good chance that the share price may fall to the next support line at S$1.69 (which I’ve identified in the previous section above.)
Is ComfortDelGro Considered “Cheap” Now at S$1.96?
Some of you may be wondering if ComfortDelGro is considered “cheap” now at S$1.96. One of the simplest ways I use to determine whether or not a company’s share price is currently undervalued is to compare its current valuations against its average.
At S$1.96, ComfortDelGro’s current valuations is as follows:
P/E ratio: 16.1
P/B ratio: 1.6
Dividend Yield: 5.0% (calculated based on 9.79 cents/share of dividends declared in FY2019)
Now, compare this to the company’s 8-year average which I’ve computed:
P/E ratio: 17.0
P/B ratio: 2.1
Dividend Yield: 3.9%
From the above, it does seem that at S$1.96, the share price of ComfortDelGro is considered “cheap” as its current P/E and P/B ratio are both lower than its 8-year average, and its current dividend yield is also higher than its average.
So, to Buy or Not to Buy?
Finally, the million dollar question, to buy or not to buy?
While you may potentially enjoy a 13.3% capital gain (I’ve not factored in the trading fees involved in both buying and selling here), assuming that you decide to buy at S$1.95, and exit for profit at S$2.21, but should the trade not work out in your favour, you may end up suffer a 13.3% capital loss should the share price tumble further and fall to the S$1.69 level.
In case you’re wondering, I have bought some shares of ComfortDelGro when it was at the $2.21 support level in mid-Jan 2020. At this point in time, I have no intention of averaging down, or exiting my trade. I am confident of its share price climbing back up to S$2.21 and above. As to how long will that take, it will very much depend on whether the share price bounces back up from its current position (at the time of writing), or crashes down further after a brief pause at the $1.95 support line.
Finally, I’d like to remind you that this post is by no means a cue to buy or sell shares of ComfortDelGro. You should always do your own due diligence before you make any buying or selling decisions.
Disclaimer: At the time of writing, I am a shareholder of ComfortDelGro Limited.
Launch Event for My First Book: building your REIT-irement portfolio
After months of hard work, my first book, 'Building Your REIT-irement portfolio' is finally ready! In this easy-to-follow 178-page guide, you'll learn everything you need to know about building a REIT portfolio that can provide for you in your retirement years. You can check out a preview of the book here.
I'm extremely thankful to the team at InvestingNote and ShareInvestor for their help to organise a book launch event for me on Tuesday, 26th September 2023, from 6:00pm to 8:00pm at their office in New Tech Park.
For more details and to RSVP (seats are extremely limited), click on the link below: