Any stock is analyzed in two ways.
Fundamental analysis
This allows us to identify which companies to invest in. Fundamental analysis requires looking at the historical financial statements of a company, which show the company’s cash flow, dividend distributions, assets & liabilities over a period of time.
Technical analysis
This allows us to identify the entry (exit) point at which to buy (sell) a stock.
Now that we’ve established that fundamental analysis tells us which stock to buy & technical analysis tells us when to buy it, I’ll give my opinion on where you can invest EGP 10,000 right now.
In terms of fundamental analysis, we find that Abu Qir Fertilizers (ABUK) is one of the most solid companies out there.
According to its income statement, Abu Qir’s net income is increasing every year at a good rate, indicating healthy growth.
According to the balance sheet, we find that its liabilities are decreasing every year relative to its assets, indicating that the company can comfortably meet its obligations.
According to its cash flow statement, we find that the company’s cash is going towards expanding its operations, indicating that it’s looking to increase production capacity based on increased demand.
We can also find positive signs for Abu Qir outside of its financial statements.
News of sovereign funds being interested in acquiring (some already acquired) stakes in the fertilizers giant.
Abu Qir’s market cap is a relatively big EGP 33 billion, & its stock is highly liquid with an average traded value of EGP 28 billion.
The stock’s price-to-earnings ratio is 3.57, meaning that its stock price is not overvalued. Its earnings per share is also a very healthy EGP 7.18.
The company is distributing EGP 3/share in cash dividends, which comes out to an 11.5% dividend yield, also a very healthy figure.
All of the above points go to show how strong of a company & stock Abu Qir is.
Here’s my opinion, & this is not investment advice as you should do your own research before making a decision:
Buying Abu Qir (ABUK) at its current price level of EGP 25/share is fair enough, albeit the price may drop once the company distributes dividends, but the dividends will make up for the drop anyway. If you miss the buying opportunity before the dividend distribution then I suggest you continue to monitor the stock. If it continues around the EGP 25/share level and doesn’t break its support level then this is a buying opportunity. If the support level is broken & becomes a resistance level, then the next support level is EGP 22/share & that’s your next buying opportunity.
* This article was not written by Thndr and does not constitute investment advice. You should do your own research before making investment decisions.
