Compagnie Financière Richemont SA is a Swiss multinational luxury goods company. CFR owns several of the world's leading luxury goods brands, with particular strengths in jewellery, luxury watches and writing instruments. Brands include Cartier, Alfred Dunhill, Montblanc, Lancel and Van Cleef & Arpels.
Technically, the price is at the start of an impulse wave according to Elliott Wave theory (used to describe price movements in the financial market), making for an attractive investment opportunity.
In the Elliott Wave analysis, a five-wave pattern is known as an impulsive wave and represents the dominant direction of the underlying trend. A share that is at the start of the fifth wave implies that the previous four waves have unfolded. These four waves consist of three impulse waves (waves 1, 3, and 5) and two corrective waves (waves 2 and 4). The fifth wave often exhibits strong momentum and can be accompanied by higher trading volumes.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R3 790. This classifies our profit target of R3 506 as realistic.
We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share code | CFR |
|---|---|
| Industry | Luxury Goods |
| Market Capital (ZAR) | 1 755.64 billion |
| One year total return | 86.81% |
| Return year-to-date | 37.06% |
| Current price(ZAR) | 3 058.60 |
| 52 Week high(ZAR) | 3 479.87 |
| 52 Week low(ZAR) | 1 610.42 |
| Financial year end | March |
| Closing paragraph | The share price has captured solid upside year-to-date and remains above its 200-day simple moving average of ~R2 474. Several technical indicators point to further upside potential. |
Consensus Expectations (Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (EUR) | 6.78 | 7.54 | 8.20 | 8.95 |
| Growth (%) | 11.21 | 8.80 | 9.17 | |
| Dividend Per Share (EUR) | 2.25 | 3.21 | 3.50 | 3.95 |
| Growth (%) | 42.67 | 9.00 | 12.68 | |
| Forward PE (times) | 19.94 | 18.33 | 16.79 | |
| Forward Dividend Yield (%) | 2.14 | 2.33 | 2.62 | |
| Closing paragraph | Earnings growth expectations remain robust, underpinned by solid fundamentals, which should be supportive of the group's long-term growth trajectory. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
PRX - Stop-loss (Close the position) |
GRT - Stop-loss (Close the position) |
TFG - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 1 387.97 | 12.34 | 83.54 |
| Current | 1 281.51 | 11.60 | 88.64 |
| Movement | -7.7% | -6% | 6.1% |
| Summary text | The trade reached our stop-loss level, and we closed the position. | The trade reached our stop-loss level, and we closed the position. |
The stock continues to trade below its 200-day simple moving average. However, the recent halt in upside momentum raises concerns.
Our profit target is R132, with a trailing stop-loss of R76. Exit the trade around 8 July 2024. |
| Share Name and position |
LHC - BUY (Continue to hold) |
MTN - BUY (Continue to hold) |
OMU - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 19.30 | 132.49 | 11.67 |
| Current | 20.90 | 135.98 | 11.85 |
| Movement | 5.1% | 2.6% | 1.5% |
| Summary text |
Approaching time to exit, but the price displays a potential uptrend. The stock continues to trade above its 200-day simple moving average. The recent halt in upside momentum raises concerns.
Our profit target is at R22.20, with a trailing stop-loss of R19.05. Close the position around 26 June 2023. |
We continue to monitor the share price which suggests that the market may be entering stage 3 of the Elliot Wave pattern. The stock remains above its 200-day simple moving average. Upside momentum supports the bullish bias.
Our profit target is R190, with a trailing stop-loss at R113. Exit the trade around 6 November 2023. |
The price displays a potential reversal of the bearish trend. The share remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is R16, with a trailing stop-loss at R10. Exit the trade around 17 November 2023. |
