Shanda Games Limited(ADR) : An opportune reversal
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
$4.36 | $0 | $4.11 | -100% |
Fundamentally, the company shows three excellent financial characteristics. Firstly, treasury is strong and constantly increasing. It is estimated to rise by +40% in one year. Secondly, profitability is very high with a net margin of 25% estimated for this year.
Eventually, at current price, the company is trading 6.48 times its earnings for 2013 and thus has a significant potential.
Shanda Games is in bullish trend in the medium and long term. In daily data, moving averages are well-oriented. Prices are coming back on the 50-day moving average and on a trend line, which should stop the downward movement.
In this configuration, a decrease seems unavoidable in the USD 4.14 area. Investors could take a buy order on this level and get a good entry point to aim a return to the 20-day moving average around USD 4.80. A stop loss will be set below the medium term support.