Hot Money Monday: Cobram, Monash IVF, Advance ZincTec among ASX ‘momentum’ stocks
Momentum investors are hot for Cobram, Monash IVF, Advance ZincTec and Aeris Environmental. Here’s why there’s a buzz about them.
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Momentum investors are hot for the likes of Cobram, Monash IVF, Advance ZincTec and Aeris Environmental. Here’s why they are generating heat.
First a few notes on where the concept of momentum trading came from and the key factors investors should be noting.
Renowned fund manager Richard Driehaus first pioneered the concept in the 1960s, advocating a system where investors bet that the stock market’s recent winners will keep the ball rolling in the near term.
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The strategy uses the strength of stock price movements as a foundation to open positions, seeking to use momentum to enter a trend as it picks up steam.
The most challenging piece of any momentum trading strategy is identifying those very trends. Investors need to not only identify the entry points, but keep an eye out for the optimal exit points and know when to get out.
One of the main benefits of momentum trading, however, is that it can generate high returns in a short period of time, especially in volatile markets.
Obviously there’s a bit of risk involved in momentum trading because in essence, investors are making a decision to buy a stock based on recent buying activities of other traders.
So to be a successful momentum trader, one needs to be able to identify the best stocks quickly and accurately.
The goal for momentum traders is basically to enter into trades at key points in the trend in order to maximise profits.
There are several indicators to quantify momentum, and here we look at three main signals used by the market:
- 52-week high
- Simple moving average
- Relative strength index
52-week highs
Traders often view the 52-week highs as entry signals.
This is due what’s called the “52-week high effect” – where if a price has broken out above its 52-week range, there must be some factor that generated enough momentum to further continue the price movement in the same direction.
On the other hand, if a stock is far away from its 52-week high, chartists believe the momentum will continue going that way.
Data from CommSec
COBRAM ESTATE OLIVES (ASX:CBO)
Cobram has been rising since announcing the completion of its 2023 Californian harvest.
The Californian harvest led to the production of 3.2 million litres of olive oil (89 per cent higher than 2022 and 48 per cent higher than 2021).
Cobram notes: “This growth in production is driven by the larger area under supply contract from third-party olive growers, and the maturing profile of our groves in California and was in line with our expectations and likely to place CBO as the largest olive oil producer in the USA.”
Cobra says the increased olive oil availability will enable the company’s US operations to continue to grow sales.
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MONASH IVF (ASX:MVF)
Monash said the first four months of trading for FY24 had been very pleasing.
“The positive momentum that built across our Domestic IVF and Women’s Ultrasound business during the second half of FY23 is continuing in the current financial year, and activity is building in the Singapore business,” it reported.
In Australia, the IVF industry has continued its positive growth from 2H23, with FY24 October YTD Australian industry stimulated cycles increasing by 2.8 per cent.
In terms out of outlook, Monash says the Australian IVF industry and Monash IVF will continue to be a beneficiary of underlying structural demand drivers.
This market is supplemented by emerging services such as genetics and egg freezing, growing patient segments, in particularly the LGBTQIA+ segment, and new patient acquisition channels.
Simple moving Averages (or SMA)
SMA is often used to determine whether a stock price will continue in the same direction, or if it will reverse a bull or bear trend.
As a general rule, if the current stock price is above the SMA, the price trend is up. If the price is below the SMA, the trend is down.
Data from CommSec
AERIS ENVIRONMENTAL (ASX:AEI)
The environmental technology company has been rising after giving an update on its FY24 trading.
Revenues as of November 17 were up 121 per cent versus pcp.
Gross margin was 58 per cent for YTD FY24.
The company said its operating expenditure had a net reduction of $250,000.
Looking ahead, management said it wanted to continue building its sales pipeline, with an enterprise focus.
It said Aeris’ goal was to drive the twin value proposition of energy efficiency and indoor environmental quality for the built environment market.
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ADVANCE ZINCTEK (ASX:ANO)
The manufacturer of zinc oxide powder for the personal care sector has been rising since receiving a cash off-market takeover offer of all ANO shares for $1.05 a share by the Mizikovsky Group, or its preference to acquire up to 11,237,709 shares in ANO.
Advance ZincTek’s board says it is looking into the proposed offer and ANO shareholders need to take no action at this stage.
Relative strength index (RSI)
RSI is a measure of the strength of a stock’s momentum, either in the upward or the downward direction, and is used to indicate whether a stock is oversold or undersold.
Generally speaking, an RSI above 70 means a stock is overbought; and an RSI below 30 indicates that it’s oversold.
An RSI above 80 meanwhile is strongly overbought, and an RSI below 20 is strongly oversold.
Data from CommSec
ALLIANCE NICKEL (ASX:AXN)
At the AGM, the battery focused company reminded investors that it has an advanced asset of scale in a first-class mining region.
The company’s project has a mine life of more than 25 years, with high-grade resource on granted mining leases.
Looking ahead, the company believes the binding offtake agreement with Stellantis N.V that it signed in April will transform its project development potential.
VENTURE MINERALS (ASX:VMS)
The mineral exploration company has been falling since announcing that it had received binding commitments from institutional and sophisticated investors to raise $2 million through a diluted tranche placement of shares.
The proceeds will be used to advance its maiden resource at the new, high-grade, Jupiter REE discovery in Western Australia.
This content first appeared on stockhead.com.au
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Originally published as Hot Money Monday: Cobram, Monash IVF, Advance ZincTec among ASX ‘momentum’ stocks
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