By Peet Serfontein & Zimele Mbanjwa.
Berry Corp., is an energy company based in the US, primarily engaged in the exploration, development, and production of oil and natural gas. Founded with a focus on value creation in the energy sector, Berry operates predominantly in the western US, with significant activities in California's prolific oil basins. The company's strategy revolves around leveraging advanced extraction and production technologies to maximise the output and efficiency of its oil and gas operations, while also prioritising sustainability and environmental stewardship.
The group believes that the successful execution of its strategy across its low-declining, oil-weighted production base, coupled with extensive inventory of identified drilling locations with attractive full-cycle economics, will support the group's objectives to generate free cash flow, which funds operations, optimises capital efficiency and maximises shareholder returns. Berry strives to maintain a low leverage profile and explore attractive organic and strategic growth through commodity price cycles.
Technically, the stock is developing a falling wedge pattern, which makes for a compelling investment opportunity (see the black converging trendlines on the main chart as well as the insert). This pattern suggests that while the price is declining, selling pressure is starting to decrease as the lows fall at a slower pace than the highs. The convergence of the trend lines indicates diminishing bearish sentiment and potential exhaustion of the downward trend. Bullish sentiment in this pattern arises from the anticipation of a breakout, indicating that buyers are regaining control and may push the price higher.
The stock is trading below its 200-day simple moving average of ~$7.40, making this a contrarian trade. Upside momentum, according to the MACD indicator, and the recent steep upward movement of the on-balance volume indicator, supports a bullish stance.
Share Information
| Share Code | BRY |
|---|---|
| Industry | Energy |
| Market Capital (USD) | 0.54 billion |
| One Year Total Return | -14.18% |
| Return Year-to-Date | 1.56% |
| Current Price (USD) | 7.14 |
| 52 Week High (USD) | 9.84 |
| 52 Week Low (USD) | 6.22 |
| Financial Year End | December |
| The stock price has come under pressure over the last twelve months. Year-to-date we have seen a slight recovery, with various technical indicators suggesting further support. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 2.74 | 0.38 | 0.73 | 0.87 |
| Growth (%) | -86.09/td> | 90.81 | 19.94 | |
| Dividend Per Share (USD) | 0.24 | 0.76 | 0.59 | 0.66 |
| Growth (%) | 215.83 | -22.16 | 12.37 | |
| Forward PE (times) | 18.74 | 9.82 | 8.19 | |
| Forward Dividend Yield (%) | 10.62 | 8.26 | 9.29 | |
| Earnings are expected to recover post-2023. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | FSLR - Stop loss (Close the position) |
CARZ - Buy (Continue to hold) |
KMX - Buy (Close the position) |
|---|---|---|---|
| Entry | 159.78 | 53.61 | 73.30 |
| Current | 143.68 | 57.21 | 76.66 |
| Movement | -10.6% | 6.7% | 4.6% |
|
The trade reached our stop loss level, and we closed the position.
Our profit target remains at $76 with a trailing stop-loss of $72.20. |
An incomplete symmetrical triangle pattern remains of interest. The ETF remains above its 200-day moving average. Upside price momentum has regained some strength.
Our profit target remains at $60, with a trailing stop-loss at $55. Exit the trade around 22 May 2024. |
The presence of a smaller inclining channel pattern remains of interest. The stock is testing its 200-day moving average. Upside price momentum regained some strength.
Our profit target remains at $86, with a trailing stop-loss at $71.40. Exit the trade around 12 April 2024 |
| Share Name and position | DAY - Buy (Continue to hold) |
CVX - Buy (Continue to hold) |
HSIC - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 69.45 | 147.89 | 76.09 |
| Current | 71.91 | 152.16 | 77.85 |
| Movement | 3.5% | 2.9% | 2.3% |
|
Note: Ceridian (CDAY) changed its name as well as its ticker to Dayforce (DAY) on 1 February 2024
The stock is challenging the upper limit of an emerging symmetrical triangle pattern. The stock remains above its 200-day moving average. Upside price momentum supports the trade idea. |
The stock price is holding above key support. Upside price momentum has halted - which is a concern
Our profit target is $167, with a trailing stop-loss of $145.50. Exit the position around 28 June 2024. |
The emergence of a falling wedge pattern remains of interest. The stock remains above 200-day moving average. Upside price momentum halted again, which is a concern.
Our profit target is $85, with a trailing stop-loss of $54. Exit the position around 5 June 2024. Our profit target is $80, with a trailing stop-loss of $67.80. Exit the position around 8 May 2024. |
