INVESTMENT markets have been so difficult in the past few years that investors could be forgiven for turning to gambling to try to recoup some of their losses. In this week's column we offer another option - instead of a flutter on Tattslotto, it could be a good time to take a punt on Tatts Group.
As this week's quarterly chart, provided by Mark Umansky, a certified financial technician and councillor with the Australian Technical Analysts Association, shows, Tatts has bounced around from a record high of $4.67 in March 2007 to a record low of $2.13 in June 2010.
But between June 2008 and June this year, Umansky observes, the price was held in a tight congestion channel between $2.66 and $2.15.
After bottoming out in early 2008, the price rose and again fell within that channel, momentarily falling through the floor to its record low. It rose and fell again, eventually creating a ''higher low'', in the third quarter of last year. Then it broke above its 2010 high at the green line on the chart, confirming the upward trend, and finally broke through its four-year resistance level at the top of the congestion/accumulation channel in June.
That could be a bullish sign, Umansky says. Should the share price continue to rise there may be further resistance points at the $3.16, $3.63 and $4.70 levels.
Anyone interested in trading or investing in this stock should place stop-loss exits either at $2.40, the dotted red line that is the midpoint in the congestion channel, at $2.23, the ''higher low'', or $2.15, the base of the congestion channel, depending on individual risk tolerances, Umansky says. In fact. anywhere in the congestion channel would work, he says.
Tatts operates its well-known lottery business as well as wagering in some states, gaming services businesses and an internet gaming operation in Britain. It recently attracted a new chief executive, Robbie Cook, head of e-accommodation group Wotif, to replace industry veteran Dick McIlwain, who will step down next year.
Tatts' most recent bottom line profit came in at $319.1 million, 15.9 per cent better than the year before. The dividend yield is a handy 8.5 per cent and it has returned shareholders an attractive 33 per cent in the past year and 11.8 per cent annually over three years. The company pays some pretty substantial sums to the likes of Wayne Swan and Ted Baillieu every year through gambling taxes, but it recently took a punt at getting some of that back.
In 2008, the Brumby government ended what it saw as the cosy Tatts-Tabcorp non-casino monopoly on pokies in Victoria. Tatts has taken legal action, demanding compensation of $600 million or so for what it sees as precipitous action.
This column is not investment advice.
The story Odds look better for Tatts as it overcomes resistance first appeared on The Sydney Morning Herald.