Brambles is looking bullish

Brambles (BXB) is a pooling solutions company and supplier of pallets, crates, containers and logistics services. The Australian-based company operates in more than 50 countries and has over 17,000 employees.

It recently went ex-dividend on March 7, 2014, and will pay an interim dividend of 13.5 cents per share, 30% franked on April 10, 2014.

This will make a full year yield of 2.8% although perhaps not as favourable as the figures some other companies are offering, it’s above industry and sector peers.

According to analyst consensus opinion* the stock is rated Outperform by 10 of the 13 analysts covering it, and Hold by two. One analyst ranks it as Underperform.

brambles image

Technically the stock is in a strong trend. During 2011 and 2012 Brambles moved in a sideways range below $7 before heading higher. Usually the longer that range is the larger the upside move tends to be. In more recent times the stock is tracking between two channel lines but has recently tagged the upper side. This portends a pause in the advance, so we expect prices to move sideways or slightly down before the upward trend resumes.

Longer term investors should only be concerned if prices reverse this current strength and head back below $7. Whilst this is extremely unlikely it would potentially suggest a return to the sideways ranging that the stock experienced through 2011 and 2012. Shorter term active investors would probably look to exit positions should prices penetrate the lower channel boundary that currently stands at the $8.50 to $8.75 area.

Whilst the stock currently offers a strong trend higher, it remains well below its major highs set back in 2007 closer to $14.00. Historically the price of Brambles does trend in a very stable matter; from 1995 through 2000 prices moved steadily and without much interruption from $2.50 to $12.

Then, in early 2003 from $4 it climbed toward $13 in yet another smooth trend. Therefore, with the current backing of analyst consensus opinion and the fact that prices have broken through the $7 barrier and started trending again, it could well attempt to continue higher over the coming 12 months toward the all-time highs nearer $14.

*Source – Thompson Reuters

Nick Radge heads a team of technical analysts at The Chartist, reviewing individual stocks and markets. AFSL 288 2000.

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