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Newdealz: If by saying 'the market does as it pleases' you mean it acts instinctively as a herd, then I'd agree.
The last few months of OCDO are a great demonstration of that.
Charts provide me with useful indicators when the herd changes direction but, ultimately, the sp must converge towards a value based on reality. I find it handy to have some thoughts about where that might currently be
I think OCDO's sp has recently been pulled back down towards that reality
For some, OCDO is full of tech promise - another ARM - for others it is a struggling tech company attached to a retail outfit facing an entirely different set of headwinds. OCDO's true value has yet to be established. Maybe it has already missed its high-tech chance and is destined to become the 'Blackberry' of robot warehousing. Who knows? The market is currently undecided on whether it's worth a fiver per share and it's under downward pressure: https://invst.ly/11uwfb
Having stepped away from them, I'm now just watching to see what the herd does next ..... and avoiding any 'oops'.
You and I might get caught Newdealz but I doubt that Valueplay would. I welcome VP's commentary, which I find enlightening .
It has always struck me that the OCDO 'split' business model - a retailer in their own right, a tech company and a warehouse/CFC operator creates conflicting priorities and objectives which result in a business that seems hamstrung. Not least because it needs to sell services and tech to companies that might view them as a competitor. I recall much the same issues when BT, a major provider of broadcast networks and services, became a broadcaster: effectively in competition with some key clients that it might also have had TO intentions towards. It's not a healthy set-up in my view.
Even if this does get to my target level, I can't honestly say that I'll automatically leap in.
Ha! Amazing indeed! I said it was ‘on the cards’, GFG, I didn’t go as far as to say we are heading directly for £30+, although the prevailing trends do suggest that Shel is on course to get there eventually. In the volatile global world of Oil, Gas and Energy, there’s a lot that can happen to either accelerate or reverse Shel’s positive run.
Anyway, this is how the usual four riders progressed with Brent this week:
https://invst.ly/11ts45
Although CVX and XOM are ‘up’ on the UK pair this week, I’ve explained in the 'underperforming' thread that, actually, the UK companies have been doing rather better than the other two over recent months and are closing the gap that formed in 2020 when Shel and BP cut dividends. This is a comparison over the last few months: https://invst.ly/11tsf6
Current and potential trends (dashed lines for the latter) tend to support Barclays target of 430:
https://invst.ly/11tllk
But although their target takes the gap at 430 into account, it ignores the one at 386 (circled) - which Exane’s recent target of 390 effectively included.
OCDO really needs to break through the solid red trends which are currently pushing it downwards, but that appears to require a tangible improvement in cash flows. Fading expectations following the TO hype aren’t proving to be enough.
Whilst I do mention from time to time how Shel and BP sp’s fell behind CVX and XOM in 2020 as a consequence of various factors including dividend policy, it’s worth noting that the gap has been closing during 2023 as the two UK companies’ sps have performed better than their US counterparts over more recent months:
https://invst.ly/11t6bi
The wider picture shows how CVX, in particular, has dropped back since early January whilst the UK companies have risen:
https://invst.ly/11t6lu
Comparisons are always subject to context - especially the period over which they are made.
That's an odd question from NeilH
(How can anyone believe a word you write valueplay?)
given that it was a factual statement and easily checked.
Anyway -
OCDO was driven down last Friday and remains under the month long red trend here: https://invst.ly/11syt1
Will we see some fight back before the weekend or will it continue towards Barclays target?
£30+ is undoubtedly on the cards. What is less clear is the path that the sp might follow to get there. It probably won’t be a straight line.
https://invst.ly/11swmw
There’ll be long term holders who are content to ‘buy and forget’ whilst others will want to supplement the relatively weak dividend yield by trading the cyclic nature of sp movements within the prevailing price channels. Reaction to the upcoming Q3 results of Shel and other oil majors should provide a useful indication of market sentiment and either support continuation of the recent rally or trigger a pull-back.
A good point from LTI regarding the relevance of Market Cap, which apparently peaked at $285.69B on Mar 18th 2020 prior to Covid and the simultaneous oversupply of oil by OPEC+ that eventually dragged OP and all the majors to a low, with Shel’s mark cap eventually dropping to $86.95B
(source https://ycharts.com/companies/RYDAF/market_cap )
I think it’s currently around $218B (please DYOR to verify),
An excellent week sp-wise: https://invst.ly/11qj7t taking Shel to the limit of what might be expected both trend -wise and in relation to OP. Although the latter might yet stretch further - the sp is about £2 up based on the 30 day moving average of the sp:OP ratio . Here’s the weekly snapshot of the the usual four majors and Brent:
https://invst.ly/11qjjo
Despite the real possibility that Shel has further to go, I took my profits today, selling off my remaining 50%. I’m unable to pay attention to it next week, my essential targets have been hit and I feel that a retrace is due - in which case I will buy back if/when I’ve made my target profit on the trade.
It’s great to see £27+ reached today.
In terms of further upside it’s increasingly difficult to gauge.
Comparisons with Brent, XOM and CVX suggest that Shel could have been around £34 today if it had performed comparably: https://invst.ly/11q8xs .
In terms of historic resistance levels we are moving into the unknown but the longer term trends (blue) suggest a possible short term target area: https://invst.ly/11q938
I believe revenue is close to 2018 levels and the dividend is around 70% of what it was. I haven't checked the reduction in number of shares in issue over that period but it will be significant (DYOR).
Yes caipi - I also sold on Monday (it was the tranche I had rebought on the previous Thursday and the trade netted £1.40 gain per share).
So I'm now back down to 75% of my normal holding level.
Trading swings of £1 or more generate useful cash.
With a gap to fill to 25.90, I'm reasonably confident that I'll eventually top back up without diluting the profit made:
https://invst.ly/11peox , especially if brent eases a bit more.
Here's OP against the usual 4 since Friday: https://invst.ly/11peu4
...and the last half hour of trading today didn’t totally rescue it but it did make the week’s trading chart marginally less negative than it was looking earlier in the day:
https://invst.ly/11na6z
The daily chart, on the other hand, presents a rosier picture for those who are convinced that 546 is the bottom:
https://invst.ly/11nad9
Shel finished the week only 20p down on last Friday, which was spectacular given that oil had dropped by nearly $9 in the meantime. I was glad that I topped back up during the week’s dip, at a rather higher price than I’d anticipated although still making my target minimum profit. Here are the four usual suspects against Brent for the week: https://invst.ly/11n9r-
My own sp v OP moving average now puts the sp at £2 above expected because, obviously, it hasn’t tracked OP downwards as tightly as it might have done. I can’t help feeling that this might get corrected after the Q3 results if not slightly before.
I’m not forgetting the gaps. Newdealz, including the one down to 264 from November 27th, 2017.
https://invst.ly/11n1se
In my limited experience gaps only fill when an sp gets close enough to them. They can remain for years - possibly indefinitely if they are part of a continuation rise or fall. Often they are filled by a brief spike. The main issue for investors here is to get a realistic sense of OCDO’s value. There’s plainly been a lot of over-expectation since that unfilled gap from nearly five years ago.
Regarding the volatility, the sp is currently sticking near the 565 level and has moved out (rather than broken out) of the most recent down trend (blue): https://invst.ly/11mpv2
So the sp has returned to the band (as marked) that it occupied during June and July following the initial phase of T/O rumours, a return to profitability, settlement of the Autostore dispute and the arrival of Rachel Osborne as an independent non-exec director.
On reflection, it’s never been clear to me what then pushed it further up from this level - I sold 50% as it reached £6, holding the rest until it peaked. Was it purely shorts unwinding or was much of the rise above £6 wishful thinking? At the time JPMorgan Cazenove had cut its price target on the shares to 400p from 450p and said: "We believe Ocado's online grocery activities will continue to face meaningful headwinds in the next months." and "With Ocado's UK Retail operations barely profitable in 2023, we see limited scope for Retail to act as the required showcase for the company's Solutions operation" (from Sharecast News 20th June).
Nevertheless, OCDO went on to briefly hit £10. It was supposedly Exane that eventually punctured the bubble but I don’t believe that JPMorgan and others have a much different view today, with analyst ratings seeming to generally be below £5 (dyor).
It’s rarely straightforward to compare Shel’s sp with Brent: for whilst they sometimes track each other tightly, there are other times when they do not. The relationship is not fixed and can be rather elastic as the sp absorbs some of OP’s more volatile moves. This changes the ratio between the two and it’s worth noting that my own record of this ratio’s moving average, which looks at the last thirty days, indicates that the sp is currently about 150p above what might have been expected as OP has suddenly fallen by around $12 over just six days. Whether this will ultimately become baked-in to Shel’s market valuation or will unwind has yet to be seen. The moves for the usual four Oil cos v Brent since last Friday now look like this: https://invst.ly/11mpim with Brent doing a merry dance prior to the LSE close, BP and XOM tracking each other closely and lower than Shel and CVX, which form another pairing.
I absolutely agree dananzi - stop losses are tricky and too easily triggered. I think it's best to be in control but most of us don't want to be staring at a screen every day, so sometimes stop losses have to be used as a final line of protection.
It's interesting to note the relative positions of CVX, XOM,BP & Shel against Brent since last Friday's LSE close and before the US market opens today: https://invst.ly/11mk40
The US market may well spark things.
BP has so far reacted more to the drop in OP than Shel.
Having made my target profit on one tranche, I bought back today below 2500 so am back to my normal holding level but I have another trading tranche lined up to 'buy' at a lower level, rather more ambitious than Armani's so less likely.
2450 is obviously on the green trend here: https://invst.ly/11mkb0
The sp is holding up well so far against the drop in OP: https://invst.ly/11mhox
Last time Brent was at $86, at the end of August, the sp was 80p lower.