Weida may have a bullish breakout

Weida has broken above its strong horizontal line at RM0.82 today. This was preceding by an upside breakout above its long-term downtrend line at RM0.80 at the end of July. With this breakout, Weida could potentially rally to test the psychological level of RM1.00 & then the horizontal line at RM1.07-1.10.


Chart: Weida's weekly chart as at August 2, 2010 (Source: Tradesignum)

I have appended the recent financial results for Weida. A quick glance will show that Weida's performance is very erratic due to the sharp swing in its Work division. In the last 4 quarters, it achieved an EPS of 13 sen as compared to 11 sen in the preceding 4 quarters. Based on its current price of RM0.845 & an average EPS of 12 sen, Weida is trading at PER of 7 times. For a small-cap, Weida is deemed fairly priced. It may trade up to a PER of 8 times; thus giving the stock an upside of 14-15%.


Table: Weida's last 8 quarterly results.

Based on technical breakout, Weida could be a good trading BUY.