Peet Serfontein, Zimele Mbanjwa
V2X Inc., formerly known as Vectrus Inc., builds smart solutions designed to integrate physical and digital infrastructure. It delivers a suite of integrated solutions across the operations and logistics, aerospace, training, and technology markets to national security, defence, civilian and international clients.
In 2022, Vectrus merged with Vertex Aerospace Services, thereby forming V2X - combining over 120 years of experience in mission support. The merger created a larger and more diversified company with the ability to compete for more integrated business opportunities and generate revenue across geographies, clients, and contract-types. The company currently provides critical mission solutions primarily to defence clients in around 322 locations and 51 countries and territories worldwide.
Technically, the stock's price movement currently presents higher lows and higher highs (refer to the first chart) making it an appealing investment opportunity. This pattern of trading above support indicates enduring buyer interest and a reluctance to allow prices to fall below certain levels, suggesting a strong underlying value perceived by the market participants.
The stock is trading below its 200-day simple moving average of ~$46.19, making this a contrarian trade.
Upside momentum, according to the MACD indicator as well as sidewards movement of the on-balance volume indicator, supports our bullish view.
Share Information
| Share Code | VVX |
|---|---|
| Industry | Capital Goods |
| Market Capital (ZAR) | 1.42 billion |
| One Year Total Return | 15.72% |
| Return Year-to-Date | -2.69% |
| Current Price (USD) | 45.19 |
| 52 Week High (USD) | 56.75 |
| 52 Week Low (USD) | 37.04 |
| Financial Year End | December |
| The stock has seen good growth over the last 12 months, with several technical indicators guiding for further upside potential. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 3.74 | 4.08 | 4.88 | - |
| Growth (%) | 9.17 | 19.40 | - | |
| Dividend Per Share (USD) | 0.00 | - | - | - |
| Growth (%) | - | - | - | |
| Forward PE (times) | 11.07 | 9.27 | - | |
| Forward Dividend Yield (%) | - | - | - | |
| The bottom-line is expected continue to grow over the near term, with further momentum being seen over the medium term. | ||||
Rationale.
Technical Analysis:
Long-term fundamental view:
| Share Name and position | PM - Stop Loss (Close the Position) |
HSIC - Stop Loss (Close the Position) |
BRY - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 93.95 | 76.09 | 7.14 |
| Current | 90.38 | 72.89 | 7.77 |
| Movement | -3.8% | -4.2% | 8.8% |
| The stock has reached our stop-loss level. | The stock has reached our stop-loss level. |
The formation of a falling wedge pattern remains attractive. The stock crossed above its 200-day moving average. Upside momentum remains supportive.
Our profit target is $8.50, with a trailing stop-loss at $7.30. Exit the trade by 5 June 2024. |
| Share Name and position | CVX - Buy (Continue to hold) |
BDX - Buy (Continue to hold) |
VWO - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 147.89 | 239.07 | 41.57 |
| Current | 155.27 | 241.88 | 41.52 |
| Movement | 5.0% | 1.2% | -0.1% |
|
The price is holding above key support. The stock is testing its 200-day moving average, with the counter-trend strategy remaining intact. Upside momentum remains supportive.
Our profit target is $167, with a stop-loss of $148.60 Exit the position around 28 June 2024. |
The presence of a well- established price range remains attractive. The stock remains below its 200-day moving average, with the counter-trend strategy remaining intact. Upside price momentum is supportive.
Our profit target is $265, with a trailing stop-loss of $232.30. Exit the position around 24 April 2024. |
The development of a symmetrical triangle pattern remains of interest. The ETF remains above its 200-day moving average. Upside momentum has halted, which is a concern.
Our profit target is $48, with a trailing stop-loss of $40.50. Exit the position around 14 June 2024. |
