Interactive Investor

Could BAE Systems shares be worth a tenner?

29th June 2022 07:45

Alistair Strang from interactive investor

A terrible conflict in Ukraine has caused a massive humanitarian crisis, and Nato is taking action to deter further Russian aggression. To arm themselves they go to BAE. Independent analyst Alistair Strang looks at the share price potential.

BAE Systems 

Ranked seventh largest defence contractor in the world, the UK’s BAE Systems (LSE:BA.) appears to have a share price worth paying attention to.

When we previously reviewed Bae Systems in February this year, it was before the Russia/Ukraine event tossed Europe into the current political shambles. Thankfully, all three of our price targets were attained and, with the share price soaring to new all-time highs and closing above 805p, it’s time to revisit and once again stir the tea leaves.

This history of BAE is worth a read, the company being the successor to some true greats in aviation and the wider military field. This includes Hawker Siddeley (the Harrier), de Havilland (the Comet), Supermarine (Spitfire), BAC (Concorde). Added to the mix, a vast range of historical shipbuilding and electronic expertise, ensures there’s nothing like a war to make the company sit up and take notice of their future.

With BAE's share price at new levels and now closing above our third target level of 805p (it closed at 826 on Tuesday), the situation now appears to be a potential of movement above just 827p calculating with a potential of 942p next. If exceeded, our secondary is quite fascinating at 1,001p.

Our interest in the secondary is actually arithmetic. We simply cannot currently calculate any higher! For this reason, we’d anticipate some hesitation at such a level unless the stock market simply opts to start gapping the share price upward to create a new trend.

Past performance is not a guide to future performance.

For those interested in “charty” matters, we’ve painted a Light Blue line on the Big Picture chart, showing an extremely obvious Glass Ceiling which formed for BAE from 2017 onward.

For some reason, the stock market was proving reticent about allowing the defence contractor to trade above 684p. At the end of February this year, the market opted to Gap Up above this ceiling level and, the rest is history. It has shown strong growth and we suspect the climbing cycle isn’t over yet.

BAE would need to fall below 600p before we’d be forced to take any reversals seriously.

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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