Clicks Group Offers Technical Value: 6 Points You Need To Know

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NOTE: When Published Intraday (JSE Equities), Prices Are Delayed By 15 Minutes

Institutional selling pressure has seen the share price of Clicks, a high quality, defensive business, de-rate from R400 to below R200 - a decline of 50% within 17 months. While the fundamental case may point to the share being fairly valued (rather than undervalued), the technical case points to a share where the price is trading at extreme levels. This may lay the foundation for a mean reversion trade.

While I don't know whether local and offshore institutional investors will continue to sell (thereby causing even lower prices), below I am highlighting 6 charts/data points that may support the case for an appealing reward-to-risk on the buy/long side.

(Note: If you have access to the market depth/order book, make sure to keep your eye on any large buy orders that may suggest incoming 'buy' volume that could support the share.)

(1) Clicks: Distance vs 200-Week Simple Moving Average (37% Below)

(2) Clicks Relative To All Share Index: Distance vs 200-week Simple Average (52% Below)

(3) Clicks: Monthly Chart - Approaching a 26-Year Trend Line Support

(4) Clicks: Quarterly, Monthly & Weekly Momentum Regimes

(5) The CEO (Bertina Engelbrecht) and the CFO (Gordon Traill) have bought at much higher prices. You can now buy the share at much lower levels that management, or should I say, you can pay less, for Clicks.

(6) A massive valuation unwind - the best fundamental level in years. The chart below is the trend of the price-to-earnings ratio (now at 13 to 14x)

21 Months ago on Monday 02 December 2024 (at R400) we WARNED clients regarding Clicks, highlighting the share approaching overbought conditions..

Original note at the following link > https://www.unum.capital/post/clicks-high-bullish-momentum-approaching-overbought-new-shorts-take-note

CLICKS share chart at the time (02 December 2024).

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Lester Davids

Senior Investment Analyst: Unum Capital