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Saturday, August 15, 2015

Technical updates – Jagran Prakashan and Navneet Education

The printing and publishing industry rarely gets a second look from most small investors. The reason is simple. Newspapers and children’s school books and stationery do not fall under the preferred ‘exciting’ or ‘high tech’ categories.

Savvy investors know how to cut through the glitter and marketing hoopla that surround popular stocks, and look for steady, boring businesses that generate cash from operations, pay dividends and have manageable debt.

Jagran Prakashan and Navneet have steady growth, net margins exceeding 10%, RoE more than 20%, Debt/Equity ratio less than 0.5 and pay regular dividends. There aren’t many companies which can boast of such numbers.

Jagran Prakashan

JagranPrakasan_Aug1415

The stock price of Jagran spent 6 months consolidating sideways in bear territory before breaking out upwards in Mar ‘14. The stock closed at a high of 135 in Jul ‘14, but negative divergences on all four technical indicators, which failed to touch new highs, led to a correction down to the support-resistance level of 108 in Aug ‘14.

The next leg of the rally took the stock to a small ‘double top’ at 145 in Dec ‘14. The subsequent correction dropped the stock below its three EMAs into bear territory and ended with another test of support from the 108 level in May ‘15.

The stock managed to cross above its three EMAs into bull territory after three failed attempts and closed at a slightly lower top of 142 on Aug 10 ‘15. It is undergoing a bit of correction, and should resume its up move soon.

Valuation looks a little stretched. Dips can be used to add.

Navneet Education

Navneet_Aug1415

The stock was in a sideways consolidation in bear territory for 7 months before breaking out above its three EMAs in Apr ‘14. The bull rally received good support from the rising 50 day EMA.

The stock closed at a high of 117 in Jan ‘15, corrected down to its 50 day EMA and then rose to a slightly lower top of 116 in Feb ‘15. The ‘double top’ reversal pattern led to a correction below all three EMAs into bear territory.

The stock bounced up after receiving support from the 90 level in May ‘15, and rose to a lower top of 109 in Jul ‘15. It again entered a corrective phase – triggered by negative divergences in three of the four technical indicators.

The stock is looking oversold, and may resume its up move soon. Can be accumulated slowly.

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