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Is Babcock a strong Buy this September?

Financial Promotion

 

In this article we will explore the fundamental and technical indicators that make Babcock an interesting proposition for investors. You can get our full analysis complete with entries and exits in this months’ Free Report:

 

‘5 Stocks to Buy this September’

 

BABCOCK (BAB)

Babcock International Group PLC is a United Kingdom-based aerospace, defense and security company.

The Company is engaged in naval business and also provides value-add services across the United Kingdom, France, Canada, Australasia and South Africa.

 

Fundamentals

In a recent update from Barclays Capital, Babcock was described as a “recovery stock gaining momentum”.

Barclays believes the company is set to generate meaningful cashflow from 2024 and has already begun the process with the sale of its 15.4% stake in AirTanker Holdings. Which comes hot on the heels of the sale of its oil and gas business CHC Group for $13.8million.

The disposals are all part of the plan to streamline the focus on key markets. The group is planning disposals that total around £400 million. The outlook is looking far brighter for the business and looks good value at current levels.

 

Market Capitalisation: £1.78Billion
Sector: Support Services
12 Month Price Range: 196.7 – 388.2p

 

Technical Analysis

After months of underperformance the tide appears to be turning for Babcock. The shares have been moving sideways for almost a year between 204 – 365p but appear to have now broken from this range.

The move above resistance at 365p on the 23rd of August 2021 is an indication that higher prices could be seen over the medium term. The small correction lower in recent weeks appears to be over as the shares exit the small wedge pattern, indicating a higher move.

The measured move of the bottom pattern suggests upside targets of 526p.

 

Verdict: BUY

 

Risk Warning: Capital invested is at risk. The value of shares can fall as well as rise; you may not necessarily get back the amount you invested. Past performance is no guarantee of future performance.  Clear Capital Markets Limited is authorised and regulated by the Financial Conduct Authority FRN 706689. 

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