Break-Out For JB Hi-Fi

This story features JB HI-FI LIMITED. For more info SHARE ANALYSIS: JBH

By Michael Gable 

The Dow Jones was down 167 points last night on higher than average volumes. This is after the 160 point drop from the night before. The volatility is in stark contrast to the last few days of last week where the market almost appeared to switch off and do nothing at all. Although we are still cautious on the overall market here, there is still the possibility to uncover opportunities in the top 200. The sell-off in tech stocks is fairly broad based, and that is a good thing. Many companies are overvalued because investors piled in on the future promise of revenue. However, some tech companies have been generating solid earnings for years now – earnings growth that has kept pace with the market’s lofty expectations. As a result, these companies will soon present themselves as buying opportunities. We will continue to monitor the quality names being caught up in the sell-off and will advise when we believe they are going to bounce back.

JB Hi-Fi
 

We looked at JB Hi-Fi ((JBH)) on 11 February and noted how cheap and attractive the business was looking. We also noted that there was good support around $17.50 but it was unclear at the time whether it would hold. We wrote that “if JBH can get through $19, then we may have some further upside. Otherwise a breach of the January low could see JBH fall into support around $14.50.” In the last two months we have seen it test that $17.50 two more times and hold it. It has now therefore finally cracked that $19 level. As a result, JBH has become a buying opportunity and in our opinion it should head back into the low $20’s.
 

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)

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

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

Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). 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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