Bell Equipment Limited (JSE: BEL) has been turning heads with a remarkable performance on the JSE. The year-to-date price surge of 59.02%, coupled with consecutive double-digit gains over the last two weeks, has been quite the attention-grabber. This week, they’ve kicked off on a high note, setting the stage for a potential sixth consecutive week in the green.
In their recent report on the six months leading up to June 30, 2023, the numbers spoke volumes: revenue soared from R4.23Bn to R6.00Bn. Shareholders saw their profits climb from R200.1M to R327.77M, propelling diluted earnings per share from R1.80 to R2.57—a healthy expansion. What’s more, their announcement of the launch of the Bell Heavy Industries (BHI) division adds a new chapter. Leveraging its engineering, machining, and heavy fabrication expertise, this division opens doors for specialized services across various industries in the country.
Recognizing the scarcity of these services in South Africa, the company’s business development director, Stephen Jones, aims to fill the gap by providing project engineering and contract manufacturing services through this division, and shareholders are on board with this forward-looking move.
Technical
On the weekly chart, the recent bullish run becomes evident, as two high-volume sessions triggered a breakout from the dynamic resistance of the ascending channel. However, on two previous occasions, such breakouts failed to sustain, leading to reversals back within the channel, and with the RSI lingering in overbought conditions, a similar retracement could occur.
If volumes decline in the upcoming week, the buying momentum could reach exhaustion, potentially triggering a retracement toward support at R21.55. From the current peak, the Fibonacci midpoint at R21.11 and the 61.8% Fibonacci golden ratio at R20.21 could become pivotal as the price engages in a possible retest of the breakout level. At these support levels, the sustainability of the uptrend could be confirmed if the price pivots to the upside.
However, a retracement may not be necessary if the volumes are sustained and the momentum continues toward R26.51. This resistance could be the turning point of the current uptrend unless another high-volume leg triggers a breakout, in which case the R28.47 level could become pivotal in the longer term.
Summary
Bell Equipment has been on an impressive journey over the last two weeks, adding over 28% to its share price. While the current week started on the front foot, there is a risk of potential profit-taking activity, which could enforce a retracement toward support at R21.55 in the upcoming weeks.
Sources: Koyfin, Tradingview, Bell Equipment Limited, Mining Review Africa
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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