Stay Long Downer EDI

Our ALGO engine triggered a buy signal in Downer EDI on June 25th at $6.74.

Since then, the stock has reached an intra-day high of $7.30 on July 10th.

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Recent broker notes have been bullish on the Engineering and Construction sector citing a high backlog of domestic infrastructure work.

The strong results for Cimic Group last week underscore this uptick in construction activity, in general.

More specifically, DOW got a lift last week after announcing it had won a 5-year support and maintenance contract with Chevron Australia.

We believe DOW is well placed to benefit from the dual tailwinds of increased infrastructure spending and a ramp up in capital spending from the mining sector.

DOW will report full-year results on August 16th. The forecast is for NPAT to increase to $295 million and the dividend per share to rise to 14.4 cents.

We see solid chart support in the $6.90 area and initial upside resistance just over $7.65.

Downer EDI

 

 

Author: Todd

Todd has worked in the financial industry for 20 years. During this time, his primary focus has been in the Foreign Exchange, Global Equities and Fixed Income areas. Todd has also served as a Judicial Advocate in several tax cases in the US Federal Court.