Resurgent Cabcharge – A Charting Snapshot

Disclaimer

This post is information of a general nature intended particularly for those with an interest in technical analysis. Do not rely on it for investment purposes without obtaining qualified professional investment advice. The writer has no shares in Cabcharge, a company which in recent years has attracted scrutiny from the ACCC.

Background information

http://www.cabcharge.com.au/company/default.aspx#aboutus

History

Cabcharge was established by the Taxi Industry in 1976 as a financial services provider for the Industry. Its first priority was to improve convenience and security for passengers and drivers through providing a national alternative payment system to cash. Today the Cabcharge electronic payment system is found in approximately 97% of Australian taxis as well as limousines and water taxis.

Cabcharge listed on the Australian Stock Exchange in December 1999 and is now one of the top 200 companies in Australia. Today it is a diversified Australian technology, financial services, taxi payments and passenger land transport Company. It also develops and manufactures in-taxi equipment.

In 2008, Cabcharge established EFT Solutions which develops payment system software for other clients, including major banks and retailers, as well as for the Cabcharge system.

Combined Communications Network in Sydney became a wholly owned subsidiary of Cabcharge in January 2002. Black Cabs, Melbourne’s second largest taxi company, was acquired in March 2003. This was followed by Newcastle Taxis and Melbourne’s Arrow Taxis.

In 2005 Cabcharge, together with ComfortDelGro Corporation Limited (Singapore), formed a joint venture company, ComfortDelGro Cabcharge Pty Ltd (CDC). It purchased the Westbus Group and later the Baxter private bus business and Toronto Bus Services. In 2009, CDC purchased the Kefford Group in Victoria.

The strength of Cabcharge is built on its commitment to look ahead, leading edge technology, continuing innovation and the expertise and commitment of its people.

 

Charting Snapshot

Down-trend intercepted

Down-trend intercepted

The above chart is a weekly one showing that the price action, having broken the downtrend trend line, has now broken-out above resistance at about $4.50. This appears to be the start of a strong impulsive move higher.

The next resistance level to be challenged is at about $5.10 if it does.

The RSI indicator has now touched the 70% level, the lower edge of being over-bought, warning that there may be a correction ahead.

 

The chart below is also a weekly one, showing Multiple Moving Averages.

It shows converged and merged plots with the short-term averages diverging strongly in the last two trading weeks, after the break-out, suggesting an emerging new trend.  The consensus price for the stock at the moment is about $4.50.

The 61.8% Fibonacci retracement level is at $5.10 and the 100% level at $6.

CAB Wk MMA 0814

Key Fundamental Metrics

  • P/E ratio = 8.67
  • Dividend yield is 6.3%, FF, with a pay-out ratio of 55%
  • Debt/Equity ratio is 58.3%
  • Return on Equity = 19.5%

Conclusions

Cabcharge appears to have adjusted to the various competitive challenges it has faced, and is perhaps being re-rated as a result.

Traders should refrain from entering just now with a pull-back possible.

Investors buying at around $4.50 may well soon see the share-price re-rated above $5.

My stop/loss price would be at about $4.15

 

 

 

 



Categories: Business, Chart Analyses, Technical Analysis

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