NextDC: One To Buy

This story features NEXTDC LIMITED. For more info SHARE ANALYSIS: NXT

By Michael Gable 

It looks like we can blame Russian interference again. The last thing that share markets needed was a plunge in the oil price. All it did was render our 6090 target for the S&P/ASX 200 Index completely useless. I have had to stress during the last few weeks that support levels don't mean much when you get panic selling and consumers start punching on in the toilet paper aisle. Yes, the 2018 low is the next magnet but you don't buy at the first moment you touch a support level, especially in markets like this. You need to observe price action day by day to see whether proper buying is coming back into the market or not.

Buyers stepping up to the plate confirm that it really is a support level, not just a painted line in the middle of the highway. At the moment there is no need to spend the cash. Not yet. Having said all that, it is widely recognised that current events are not in the same league as the GFC which saw bank after bank file for bankruptcy. This means that the eventual bounce would be the greatest opportunity since the GFC. That is, a one in 10-year opportunity. As we highlighted last week, more damage can be done by holding onto the wrong stocks when the market recovers, so it will be very important to jettison the bad companies and then be ready to rotate into more quality when the time is right. 

In this week's report we’ve looked at companies which have been holding up well during the last weeks, including NextDC ((NXT)).

NXT spent much of 2019 underperforming the index as it drifted sideways. It then broke free of that range in January by pushing beyond resistance near $7. It has since retested that and gone on to new highs. The chart looks very bullish here, even more so against a backdrop of falling markets. It is likely to ease back here in the short term due to market fear, but once that is over, NXT should then be able to trade to new highs. The chart would stop looking bullish if NXT heads back under $7. 

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services. 

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
 

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