Flight Centre (FLT) and ARB Corp (ARP) are correcting

finicky

finicky

Well-Known Member
Silver Stacker
Two top quality stocks being punished over the last two trading days (incl today). I've already mentioned Monodelphus as being in correction mode (MND). The CFD market is foreshadowing a decline in the Dow tonight - down 148 points as I post.

I'll be watching both ARP and FLT for entries in the days/weeks to come if the price is right. Both these stocks high on my watch list of prospects. ARB Corp (ARP) is the crme de la crme of asx small blue chip stocks, if I can put it that way. Talk about ARP on another occasion- it's not coming into cheap range yet, for good reason.

However Flight Centre (FLT) - here are the Skaffold valuations:
FLT is graded as an A2 stock, A for quality, 2 for recent performance.
Estimated intrinsic values for FY12, FY13, FY14, are $30.63, $32.71, $34.46
Friday's close was $20.55 and the stock is down another 43c as I post. That's a big discount if the future earnings estimates turn out to be correct.

I always look to see how a buy prospect weathered the GFC by looking at its earnings per share and dividends in FY08 FY09.
Flight Centre was hit hard in the GFC with earnings per share roughly halving, and dividend down 90% in FY09. However by FY10 FLT had made up almost all the lost ground.

The chart of FLT - that's another post
 
Whither this chart? Tossing up whether to make a first buy. Trouble is, at the moment I'd give a better than even chance that the share price is returning to strong support - in these nervous times - at $16. There is a chance though that it might be just retesting the break of resistance at 20 and go up from here.

Just last night Roger Montgomery was pumping it on Sky News Business Channel's 'your Money Your call' program. There's this segment on the show called "30 Secs', where a panelist has just 30 secs to plug a particular stock, and of all stocks on the ASX Roger interestingly chose Flight Centre. Made an interesting comment about FLT's promising international roll-out strategy. Have to keep in mind though that he manages over $100m of clients funds and currently has them in a position with FLT.

The broker and trading house analysts look pretty bullish on FLT. Morningstar on Comsec has 5 analysts recommending FLT as a strong buy and 1 recommending a hold. That's very high, but then again, quite a while and a lot of dollars back they were rating BHP very highly too.


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Don't buy FLT, your guess that it will go down less than 16 or 17 is correct. And that's the best case scenario for it in my opinion.
 
Misread it and missed big on this one. Up another buck today to $33 - 34 (not showing yet on this weekly chart). Personally I think its topping now. Also saw one of the Montgomery Fund's crew a few nights ago saying FLT was one of the stocks they'd sold as the valuation was 'stretched'

Made a file of this outcome for the old cranial filing cabinet. Its one of those good object lessons. My working scenario for this one was that it was an invalidated Head & Shoulders pattern and could come back to test the level support at $16. It got to about $17, and then the thinking was too rigid to accept that it had reversed the downtrend. I think that's an example of 'price anchoring'. I wanted $16 and when I didn't get it I sulked and stopped watching the stock.

With hindsight I now believe the 2011 downtrend for FLT was just correcting the 2009-10 rally from $4 to $24. After it decisively broke above the corrective downtrend in Feb 2012, price made a peak of $22 then retraced to test the old down trend. Just put a ruler across the peaks of the 2011 corrective downtrend and extend the line - the MarAprMay retracement almost bounces off it at $17 and from there on clear sailing.


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FLT now sitting around $44. Congrats to all those that got in early (say, $3.74 in March 2009). Wish I was one of them!
 
Flight Centre (FLT) is undergoing another correction. Without looking into the FY14 results myself so far, stocksinvalue.com.au reviewed its valuation after FY14 results and currently estimates the value of FLT for FY15 at $45, which is +11% higher than its Thursday close.
Trailing P/E at today's price of $41 my calc = 16
Trailing Yield at today's price of $41 my calc = 6% ff

Chart - I'm seeing another head and shoulders, neckline break already at $44 or $42, Target $35? Maybe lower. Current price ~$41

1893_flt_3_yr_wkly_oct_17.gif
 
Is ARB Corp (ARP) readying to break down from a double top? It seems there are quite a few of these top notch companies whose shares are correcting.

It's still quite possible that ARB is just correcting sideways - Gary Glover explains this as "a stock can correct in price, or it can correct in time". That is, a well performing stock that gets over-priced might just churn over and use up time without gaining in price and losing only a little till value starts to match price. If that is the case it will rally before long to continue sketching out a rectangle consolidation. However ARB is acting the weakest it has during the 2 years that it has been treading water. A confirmed close below $10.50 would seem significant? Current bid is $10.76

Stocksinvalue's (Clime Asset Mgt) valuation has ARB Corp at not far above intrinsic value. Currently sees it as worth $10.48 on estimated fy15 earnings.
It is one of the stocks that Clime 'likes' and is on their watch, and is described as a low business risk and financially healthy company.

Decade Monthly ARB Corp Chart
1893_arp_mthly_decade.gif
 
Flight Centre (FLT) down 5% and low of 34.55 today
But still expecting lower, based on chart vibes alone.

3 mth Daily
[imgz=http://forums.silverstackers.com/uploads/1893_flt_3_mths_dly.gif]
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Down $3 (8.7%) at midday, follows announcement - fy15 profit before tax downgraded
Also a fund manager notified of sale on market of $34m. Date of change was day before yesterday. How clairvoyant.

" ...this will make it difficult for the company to achieve its initial target of a full year underlying profit before tax (PBT) of $395million-$405million (5-8% growth)
The company now believes underlying PBT for 2014/15 will be between $360million and $390million. The top of this range represents 4% growth on the record $376.5million
underlying result achieved during 2013/14, while the bottom represents a 4% decline."
Click to expand...
http://stocknessmonster.com/news-item?S=FLT&E=ASX&N=835484

[imgz=http://forums.silverstackers.com/uploads/1893_flt_3_mths_dly_18_dec.gif]
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ARP looks to have thrown out an anchor? Close enough to bullish engulfing candle on weekly and Hammer candle on the monthly. Pulled up almost precisely at the level of the Feb low. Wouldn't surprise to see it rally.
$10.50 being the obvious key level

3 yr weekly
[imgz=http://forums.silverstackers.com/uploads/1893_arp_weekly_dec_20.gif]
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3 yr monthly
[imgz=http://forums.silverstackers.com/uploads/1893_arp_3_yr_mthly_dec_20.gif]
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I don't understand why you keep saying hammer candlestick and monthly chart is the same sentence. Or 'close enough to a' bullish engulfing pattern, you need a gap down and a run higher so the entire candlestick engulfs the previous candlestick (hence engulfing). Also the head and shoulders pattern you saw in October - I don't understand that either because a H&S patter needs to have two shoulders at the same peak level and the head above that, not one broken shoulder that is lower than the other, that's just a downtrend or something else. Who's theory or what book are you getting these definitions from? I'm just obviously working off a completely different model of analysis than you.
 
So Flight Centre (FLT) has already corrected enough to satisfy a projection of the head and shoulders pattern proposed in a previous post. Bounced off about $31.

Could be at a crossroads now where it's finding enough buyers to push it over its downtrend or alternately it's at a swing high and ready for a retracement of its quite strong rally (on the daily scale). I'd be picking the latter retracement scenario given today's action so far. I wish I were in a position to be buying a first parcel in this soon. Good consistent dividend stock, no debt complications.

1893_flt_feb_6.gif
 
So retrace was the way it went, then 12% surge today on release of interim half (H1) report. Frankly I can't see what the market reacted to so positively in the report, maybe the result just exceeded poor expectations. Also FLT is a favourite shorters' stock so maybe there was stop loss buying from shorters? Dividend maintained in line with previous calendar period.

Chart is now showing 3 higher highs on daily scale, i.e. inarguably trending on that short term scale.

[imgz=http://forums.silverstackers.com/uploads/1893_flt_feb_24_dly.gif]
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finicky said:
Frankly I can't see what the market reacted to so positively in the report
Click to expand...

I have no skin in the game, but is it because the share market provides the only real gain on investment? It's like everything else is shite so we might as well invest in stocks.?
 
mmm....shiney! said:
I have no skin in the game, but is it because the share market provides the only real gain on investment? It's like everything else is shite so we might as well invest in stocks.?
Click to expand...

That might be a part of it as Flight Centre is a good dividend stock which contrasts it with the yield from bank accounts; remembering also the tax benefits of dividends.
But it's a good business historically: no long term debt, net cash held, negligible share issuance over 10 years, equity per share growing steadily over the years (from retained profits) while still paying a dividend, Good return on its equity.

It's not like its the least ugly option, it's been a good investment for holders. It's appeal enhanced by the poor option of saving cash lately.

I just meant that it didn't look a glowing H1 result this time yet the share price reacted very strongly
 
Flight Centre (FLT) down almost 16% today on release of FY15 full year guidance.

"Based on current trading results, FLT expects its underlying* profit before tax (PBT) for the
12 months to June 30 2015 to be between $355million and $365million.
The mid-point - a $360million underlying PBT - is at the bottom of the company's targeted
range of $360million to $390million for the full year and is 4.4% lower than the record
$376.5million underlying PBT achieved in superior trading conditions during 2013/14.
Actual or statutory PBT during 2013/14 was $323.8million.

Result highlights for 2014/15 will include:
Record total transaction value (TTV) in FLT's 10 global businesses
Solid growth in overseas profits, with four businesses - the United Kingdom, United
States, Singapore and South Africa (local currency) - on track to deliver record
earnings before interest and tax (EBIT)
A record year-end company cash balance in excess of $500million; and
Continued investment in the business's people, platforms and sales network
While TTV in Australia will exceed last year's sales milestone, EBIT will fall short of the
record result achieved during 2013/14.
 
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