Interactive Investor

Why Convatec shares are worth watching closely

28th July 2022 06:44

Alistair Strang from Trends and Targets

This £4.6 billion company might not be familiar to many investors, but it is on the cusp of winning a place in the FTSE 100 index. Independent analyst Alistair Strang explains why the shares have caught his eye. 

    To go straight to the numbers, we actually quite like the current position of ConvaTec Group's (LSE:CTEC) share price.

    At time of writing, they’re trading around 229p, the share “only” needing above 234p to hopefully trigger some movement toward an initial 250p.

    While such a movement may not sound like much, visually it’s quite useful, exceeding the long term downtrend sine 2017 and. better still, should it trade above 250p, our long term secondary of 277p becomes a valid ambition.

    Curiously, we increasingly find ourselves in a strange position with price movements. For instance, the scenario above is thanks to share price history AC (After Covid) but if we opt to review the big picture potentials BC (Before Covid), a quite different scenario is presented, one where we’d typically view the share as heading to 300p with secondary, if bettered, a longer term 365p.

    Past performance is not a guide to future performance.

    It is possible that insufficient time has gone by to allow us to understand which model the market is working to. When the near universal ‘Pandemic Drop’ occurred in March 2020, does this represent a point in time at which the market has opted to start again in calculating price movements. Or will it be the case, once AC movements become exhausted, shall Big Picture influences take over?

    Regardless, we suspect Convatec shall prove worth keeping an eye on in the weeks ahead. The price needs below Red (174p currently) to cause a 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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