Taptica has been featured on this blog many times over the past six months. The chart of the share is shown below over the past 6 months. The chart reveals a share that’s much undervalued by the calculations on VectorVest and growing earnings per share (EPS) strongly. VectorVest calculates that TAP.L will grow earnings by 32% in the next year which by any measure is excellent. The green line study above the price is the valuation while the blue line study in the window below the price is EPS. Of note is the Growth to PE (GPE) ratio of the share at a value of 2.77. A GPE of greater than 1 indicates that TAP.L is undervalued.
Since the high made on the 19th July, the share has pulled back in a 3 wave pattern. This is a pattern that FIB analysts refer as an ABCD and it is considered a bullish pattern by these market students. Of note is that the low made on the 24th August was a 78% retracement of the last range which will also have the FIB analysts salivating.
In the 2nd chart below I have removed the valuation and EPS to more fully study the price action over the past few days.
Over the last 5 trading sessions the share has traded within the limits (high-low) of the bar that charted the low of the 24th August. This is known as a “multiple inside bar pattern” and it invariably precedes a strong move. The pattern needs to break to confirm the move, and of course, it could break downwards. A close above the high of the pattern which is a close above 381 would act as confirmation of an upside break. This is the most likely outcome as the fundamental picture is excellent.
TAP.L is presently on a hold on the VectorVest program. If the recommendation should change to BUY and the overall market direction remains positive, then traders who enjoy buying pullbacks can consider the opportunity. The first target will be the old high at 440p and the next a 1.618 extension of the pullback at 500p.
Please remember to size your positions carefully and remember if the trade is successful there will be plenty of time to add to the position size. I wish to be wrong with a tiny position and correct with a large position.
September 4th 2017