Editor’s note: This article was first published in December 2012. The stock picks, share prices, support and resistance levels, the expectation that Ezentis would earn over 90% of its business abroad by 2014 and the outlook for 2013 all date from 20 December 2012. Readers should not act on them today.
Low market capitalization, some heavily exposed to the Spanish market, and all of them going through problems. They are Ezentis, Deoleo and Grupo Prisa, all listed on Spain’s Mercado Continuo (the electronic trading platform of the Spanish exchanges). Of these three companies, the one I have most doubts about is Grupo Prisa, since it will have to adapt to the new technological era and grow its revenue there, which is no easy task in the world of journalism. That said, I didn’t pick them on fundamentals, but because they are trading at support levels, which lets us place stop-losses close to the current price.
Deoleo
On 23 April 2012 it hit an all-time low of €0.26, finally closing at €0.27. That is the nearest support we have, very close to its current price of €0.27–0.28. For now that support is holding again. In this company’s favour over the medium to long term is its product, olive oil, whose benefits many countries have yet to discover. The company is trying to conquer the Chinese market. Its turnover may not change much over 2013 (or it may), but the results will come, so the current price is a good entry point.
Ezentis
Ezentis has been setting rising supports (higher lows), with the latest one holding around €0.15. If it loses that support, there are two other strong ones around €0.145 and €0.13, and at those points I’d take the opportunity to buy again. This company really is improving its results considerably. Its next results could be affected by new investments in other countries, but those investments will translate into positive results. It is less and less exposed to Spain, and more than 90% of its business is expected to come from other countries by 2014. For the long term, this is a company to own on fundamentals, and technically it is forming a reversal pattern, although with significant resistance at €0.16 and €0.18.
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Grupo Prisa
On fundamentals, I wouldn’t buy into this company, because of its high debt and a business model we don’t know will be sustainable. Technically, though, it’s ripe for the picking: it is sitting in the same support zone that held on two previous occasions, after which the price shot up. Knowing speculators, as soon as the “market depth” gives them the green light, they’ll jump in. So you can take a position with a speculative horizon: entering at €0.24–0.245, you can set a very tight stop-loss.
Featured image: John Seb Barber, CC BY 2.0, via Flickr.
