It's been a while since I wrote an article. Please feedback below to me on how often would you like me to post articles on my opinions of stocks. If there is a demand for it, I will try to commit to writing more.
Anyways guys today I would like to highlight this hidden pearl which I had spotted recently :
PARLO (BSKL Code 0022)
Short to Mid Term, TP : 13-15c, Long Term TP : 20-25c
Here are my thoughs on this stock:
1. Low Total Float
Refer image below taken from latest Annual Report on the list of top shareholders
Total number of shares of this company is 364 million. So far there is one large shareholder with 250 million (69%) shareholding. Therefore making the effective float about 114 million (32%) only as the major shareholder will most probably hold onto it.
Usually, shares with lower effective float tend to move in a trend stronger than those with higher effective float shares.
2. Technical Analysis - Major MACD Crossing on Weekly Chart
Refer image below of the Weekly chart of PARLO
As you can see, PARLO has been on a downtrend for about 15 months now since it was unsuspended in January 2018. since then, there had been 3 attempts to break the downtrend (circle 1, 2 and 3) but failed. It has then continued downtrending.
However, recently we can see in Circle 4, that the solid closing on the current week had made it broke the downtrend channel. This move is also supported by a crossing of MACD in Circle 5, and also building volume in Circle 6. From all the above, we can undoubtly deduce that the stock has turned bullish.
3. Financial Analysis - Improvement in Revenue and Decreasing Losses
Refer image below taken on the Quarter Results
We can see in Circle 1 that recently PARLO had recorded highest revenue out of the 4 quarters, and that the company losses are decreasing (circle 2). Therefore, from this trend, it is likely that the company will be able to turn the losses into profits in coming quarters if management is able to control the costs.
Also, company has estimated good prospects for coming quarters (extract from quarter report) :
PARLO expects performance to improve in coming quarters after their implementation of new strategies and initiatives.
Based on my opinion, PARLO is an undiscovered pearl due to following simple reasons:
a. Low Float - ability to trend strongly without big resistance
b. Bullish Chart - breakout of downtrend and MACD crossing on weekly chart in increasing volume
c. Improving FA - improving revenue, reduced losses, and good prospects ahead
Thanks for reading and see you in the next post.