Bharat Electronics: A Defense Svcs Co Marching on Higher Volume

Posted Date: May 25 2021

Bharat Electronics stock has broken out of a 9-week, 25% deep Cup Without Handle Base 2-weeks ago. However, the stock is still offering investors an opportunity to get on board as the current price is only 1% away from the ideal buy price of INR 155.

 

The stock ended the week on a bullish note. It closed 9.9% up on a 84% greater volume than the 10-week average. You want to see a strong close on heavy volume like this before initiating a position. That signals institutional buying. You would also want to see the same price volume momentum to continue in the coming weeks.

 

The key trend lines, 10 and 40-week moving averages are at a comfortable position. The current trends of both the averages are upward and the 10-week moving average is trending above the 40-week moving average. The current price of the stock is trading around 14.88 % away from the 10-week moving average.

 

In the last twelve months, Bharat Electronics has rallied nearly 150% as compared to 68.4% for the Nifty500. It has a Relative Strength Rating of 68. We definitely would like to see improvement in the rating. At this point we are taking a step back and focusing on the RS Line.

 

The Relative Strength Line of the stock is offering a lot of encouragement to investors. It has been making good progress in the last four weeks. The overall long term trend of the line is also trending upward. If Bharat Electronics can maintain this outperformance, it could make sense as a CANSLIM trade.

 

Another key part of the jigsaw is institutional sponsorship. Bharat Electronics has an Accumulation/Distribution Rating of 'A+'. This represents heavy institutional buying over the past few weeks. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.

 

On the earnings front, Bharat Electronics has an excellent EPS Rank of 89, which indicates consistency in earnings. The earnings and sales for the stock have grown by 8% and 11%, respectively over the past three years. Its 3-years earnings stability is 11, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 36% and 15%, respectively. The 5-years earnings stability is 59. The return on equity for the last reported year is 18%.

 

The stock belongs to industry group of Aerospace/Defense. You would still want to see some improvement in the industry group rank for the group. The current industry group rank is 65. The current price of Bharat Electronics is -2% off from its 52-week high price and 156% above its 52-week low price.

 

The stock appears on our idea lists: Trend Template - 5 Months

 
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