Interactive Investor

Galliford Try: A cheap income play, but when should you buy?

Our analyst thinks Bovis may have dodged a bullet when Galliford Try rejected its bid approach.

29th May 2019 09:34

Alistair Strang from Trends and Targets

Our analyst thinks Bovis may have dodged a bullet when Galliford Try rejected its bid approach.

Galliford Try (LSE:GFRD)

The often confused "we want to buy you, then you want to buy us" events surrounding Galliford Try (LSE:GFRD) and Bovis (LSE:BVS) appear to be concluded for now.

We last reviewed Galliford in February last year, when the price was 800p. Our initial drop potential was 696p - achieved - with secondary (when broken) at 308p. Any changes?

- High-yielding Galliford Try shares blast higher
 
We've a slight suspicion Bovis may have dodged a bullet here as the share price is trading below its last ditch uptrend since 2010. There are a couple of important thoughts pertaining to its current position.

Weakness now below 499p looks capable of entering a cycle down to 431p initially. We'd hope for a bounce at such a level but if broken, secondary calculates at 265p.

Rather worse is the calculation of the share price now trading in a region where "ultimate" bottom (the level we cannot calculate below) is at 39p. Obviously, this is the sort of ridiculous drop which usually requires some really grotty news issued.

At present, the share requires to better 850p, just to signal the immediate pace of descent has eased. Such a miracle allows recovery to an initial 1,079p. If bettered, secondary is at a longer term 1,385p.

For now, it appears dangerous but perhaps worth watching for 265p making an appearance at some point.  After all, folk will look at the lows of 2009 and 2010 and judge, for this reason alone, a bounce can be expected.

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

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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