I have profitably traded Beef Cattle Producer Australian Agricultural Company (AAC) four times over several years, the last occasion being in the first half of this year (2017).

My entry was staggered over a five week period from 20/01/17 until 1/3/17 after support was broken at $1.56, but new support emerged at $1.40. I have followed a contrarian philosophy.

Exit pre-empted the break in the trendline, but marked transition to a consolidation phase. The exit price was $1.8475, and yielded $1854.95 profit.

Investor inclination is to re-visit stocks that have been profitable for them in the past. I admit to such a bias, and when the share-price fell to re-test support at $1.40, I re-entered with a parcel of 10,000 shares at an average price of $1.45, probably unwisely “jumping the gun” before emergence of a defined uptrend. What is the risk of further falls instead of the bounce I hope for?

Agricultural enterprises such as AAC, are subject to the vagaries of  climate, political policy, and exchange rate movement, together with other causes of fluctuation in supply and demand. It is not surprising therefore that sales and profit can be volatile. I have assumed that the underlying business is still sound.

I am unqualified to express any opinion on the trading results that were presented this week for the half-year ending 30 September 2017 but note that total sales were $197.2 million, down 16.9% on the previous corresponding period, and diluted earnings per share was -6.46 cents. As expected, the share price has reflected the trading results.

Categories: Chart Analyses, Company review

Tags: Australian Agricultural Group