Date of Data Capture: 28/7/2016
Name: WEBSTER LIMITED (WBA)
Classification: Food & Farming
Current Price: $1.30
Market Capitalisation: $461M
Forecast EBITDA Growth: 79.3%
Gross Yield: 0.9%
Consensus Price Target: $1.47*
# Covering Analysts: 2 (*thin coverage)
Discount at Current Price: 13%
Price Target Trend: Flat
Signal Time Frame: Quarterly-Monthly
Trend Bias: Up Medium-Short
Short-term: Neutral Negative
Medium-term: Positive Neutral
Set up Notes:
• WBA recently broke above resistance and out of a major consolidation, while a retest is that zone is likely the bigger picture is very positive.
• Once past the resistance cluster between $1.20 and $1.25 the stock shot up and has skated up along short-term dynamic support since – there could be a great buying opportunity on a bounce off those same levels.
• That said the fundamentals are excellent and there is a lot of momentum building behind this one in a sector having some remarkable successes lately.
Growth Focus: WEBSTER LIMITED (WBA)
Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.
Australia’s 4th oldest company, Webster Ltd (WBA) is also Australia’s largest onion and walnut grower and exporter. Originally founded in Tasmania they are now based in NSW with agricultural and horticultural investments spreading across QLA, NSW and Tasmania. This is an exciting agribusiness company with high barriers to entry, good water supply and a favourable production profile - finding value at these levels was an easy nut to crack.
While they currently pay a small (but increasing) dividend the real reason to Buy Webster is capital growth and with strong sales, increasing margins and profitability being predicted to continue strongly, this company offers value like low-hanging fruit. Their investments in water supply de-risk the walnut orchards, which are their most lucrative production line, while also offering favourable opportunities to benefit from surplus. With water supply becoming progressively more important, the old line of ‘following the money flow’ is becoming more synonymous with just ‘following the water flow’ – and they have excellent liquidity there.
The price history is typical for a successful growth stock that topples over under the weight of their own success. With a rally that began late in 2011 around 30c, they rose up almost 700% to hit a peak of $2.00 by mid-2015, at which point they entered into a secular consolidation that brutalised them over 12 months to see them hit a low of around $1.10. Since then we have seen them grinding sideways and higher as they work through resistance layers, culminating with a break through their major resistance cluster priced between $1.20 and $1.25 just two weeks ago and we expect them to branch out further from here.
Fairly typically, the resistance break saw them pop to the upside and while we should expect a dip to retest those old levels for support in the short-term there is enough here to get us invested. They are showing good and positive signalling with excellent momentum building up nicely in the longer-term frames while they do show a bit of weakness in the very short-term which leaves us expecting a retest before too long. A bounce off the support-cluster at $1.20 - $1.25 should represent a very good buying opportunity waiting to be unearthed.
If this nascent long-term uptrend unwinds according to potential we should expect a bump at old structural resistance targets around $1.40, $1.60 and $2.00 should it go that far. The good news with these resistance targets is that they tend to attract price trends – even if they sometimes caused them to falter – and accordingly could represent profit points. This will of course be dependent on price action at the time and whether the resultant uptrend is fully ripened and ready to harvest.