Interactive Investor

Is Woodbois share price surge sustainable?

5th May 2022 07:26

Alistair Strang from Trends and Targets

Shares in the resurgent Africa-focused timber merchant are trading at multi-year highs, but what next? Independent analyst Alistair Strang runs the numbers. 

Woodbois Ltd (LSE:WBI) is listed on the AIM market and involved in the production, process and supply of sustainable hardwood from Africa. Hopefully, the company bottom line enjoys a boost from the exorbitant increase in timber prices over the last year rather than the absurd prices “just” being a facet of supply chain issues in Europe and North America.

Such is the increase in costs, rather than buy a support for a log shelter canopy, it proved easy for me to use a couple of 2 metre straight branches from a walnut tree in the garden. Visually the end result proved quite pleasing too.

The last seven sessions for Woodbois' share price have proven quite useful, and now movement above just 8p should bring a visit to 8.5p next. While perhaps not the most inspiring movement, we’ve been awaiting this break upward for a year.

Above 8.5p and things become more interesting, suggesting ongoing growth in the direction of 9.6p. But realistically, we must concede the price shall be trading in a zone where a longer term 12.5p is shining brighter than the checkout values at a timber yard.

For everything to go horribly wrong for Woodbois, the price needs to tumble below the point of Blue trend break on the chart at around 4.5p. The implications of such a movement risk a visit to 2.6p, a level we cannot calculate below without using minus signs!

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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