Stock Picks – Old Mutual
We initiate a LONG position. Our upside target is set at R13.25. We recommend a stop-loss at R9.50.
Analysts: Peet Serfontein, Pritu Makan
Old Mutual is the largest life insurance company in SA and has dominant market share in the lower end and corporate segments. The group offers financial services to individuals, corporates, and institutions across 17 countries.
Technically, the price is testing the lower range of a declining channel pattern (black parallel trend lines on the main chart) which makes the stock attractive as an investment option. Bullish divergence is also evident, and this generally marks the end of a downtrend.
The on-balance volume (OBV) indicator – which uses volume flow to predict stock price changes – is currently moving sideways, indicating that money remains in the stock.
Relative Strength Index (RSI) forward calculations suggest that the share will be in overbought territory around R16, which classifies our target price of R13.25 as realistic.
Old Mutual is a formidable player in the insurance space with a healthy capital position, and well poised for recovery.
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