No reason to buy

Dec 18th, 2009 – Comment

All the good fundamental parameters aren’t moving the stock higher. In these cases I always like to remind myself that the best time to buy a stock is when its going up.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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china mobile

Hi Lou,

I am interested in China Mobile CHL-N.Seems to have decent numbers and dividend ,my concern is increased competition in that part of the world that might erode some of the good things. Appreciate your comments. Thanks and merry x-mas

Ed

Hi Ed,

Best of the holiday season to you as well my friend!

China Mobile ( CHL NYSE) is the worlds largest wireless provider with 513,460,000 subscribers. They have a 72.4% market share in mainland China which you might expect from a state owned enterprise in that country.  If you are looking to buy into CHL tat this point you might want to see an advance above $49 to take some of the risk off the table.

CHLThe three year chart provides a view of the support that CHL is holding onto at the $45.50. Its not a perfect picture given that the stock is trading below its 50 and 200 day moving averages and that is why I would want to see it break above $49 before taking on a position.

The three month chart provides a closer look at the current situation. The RSI is trending to oversold and the MACD has yet to indicate a turn. The 50 day moving average is also very close to a cross below the 200 day moving average.

CHL2With these indicators in play it suggests to the prudent investor to proceed with caution. If we fail to hold support at these levels we could retest $40.

The dividend yield of 3.89% is very attractive and the company has a PE of 11.5 and average EPS growth over the last 5 years of 29.9% which are also better than most competitors in the space. But all the good fundamental parameters aren’t moving the stock higher. In these cases I always like to remind myself that the best time to buy a stock is when its going up.

Happy Capitalism!

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