Interactive Investor

Are Angus Energy shares about to bubble up?

19th January 2022 07:34

Alistair Strang from Trends and Targets

This small-cap oil and gas company has had it tough, but the shares hit Alistair Strang's target, and the independent analyst's interest has now been piqued by recent price movement.

Sometimes “what happened next” can prove quite illuminating. Noticing Angus Energy (LSE:ANGS) was one of the more active shares on Tuesday, along with being rated as a “Strong Buy”, we were curious, thanks to our previous report in early 2019 being quite gloomy. We had been able to give an ultimate bottom target of a ‘devastating’ 1.75p, unable to calculate below such a level.

Guess what?

Four months after our report, the price hit (and broke) our target, eventually settling to a bottom of a pretty vile 0.4p. By any standards, this was not the behaviour of a civilised share and, therefore, we’re pretty interested in its potentials, given the flurry of immediate interest.

A glance at their website reveals a gas and oil extraction company, cheerfully boasting they’re not involved in hydraulic fracking in the UK. Everything given, all looks very positive, justifying us running the numbers against their share price behaviour in the recent three years.

It’s certainly the case, if we glance at their price movement chart, some real optimism may now be possible.

Often, it’s the case when we’ve allocated a “serious ultimate bottom” number against a share price, even if this number breaks (1.75p in the case of Angus) there can prove to be future movement to try and regain such an important level. Folk tend to describe this confidently as “back-testing”, a facet of price movement which should have no basis in reality, aside from the fact it can happen.

Needless to say, we’ve a theory about this… If a key price level breaks, there are doubtless a huge bunch of people who opted to buy at a major target drop level. Doubtless, since July 2019, this group have been horrified at their funds taking a prolonged holiday.

As a result, should Angus recover to the 1.75p level, we expect a flurry of people opting to Bail At Break Even (Babe). This alone will tend to provide some hesitation in any recovery cycle, allowing analysts to nod wisely and describe the share price as simply ‘back-testing’ a prior level!

Source: Trends and Targets. Past performance is not a guide to future performance

However, there are a few facets of Angus Energy's price movements we deem worthy of note. Firstly, and most importantly, despite the share price getting an utter hammering, it remained trading, and the company haven’t opted to take the route of share consolidation in an ill-guided attempt to make their share price look stronger.

Secondly, it looks like the share price has discovered a trend line to exceed, behaving as if the Blue line on the chart shall prove valid. Third, if you opt to turn the candles off and simply view the share price at the closing price level, it’s achieving higher highs and looks capable of continuing acceleration above the 1p glass ceiling level.

As a result, movement now above 1.35p should aim for an initial 1.5p, with secondary, if bettered, at 2.17p. Curiously, there’s absolutely no mention of our 1.75p level, thanks to substantial recovery strength being evident should the price discover an excuse to close above 1.5p.

We’ve pencilled in a distant 3.5p but, realistically, shall prefer running the numbers again if our secondary 2.17p makes itself known.

The share price currently needs to retreat below Blue, presently 0.88p, to suggest panic.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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