Clicks Group Limited (JSE: CLS) is experiencing a noteworthy surge, boasting an impressive 24% uptick since its latest earnings release just over a month ago. This remarkable upswing is a direct result of the robust performance showcased in the report, where the group not only demonstrated resilience but also achieved significant market share gains across all its core segments. This success translated into an 11.5% expansion of full-year earnings.
Even in an environment marked by increasing strain on consumer disposable income, Clicks has stood resilient. The company’s turnover, excluding vaccinations, saw a noteworthy 8.2% increase, reaching R41.6 billion. This positive momentum further extended to the bottom line, reflecting a substantial rise in diluted headline earnings per share (HEPS) from 936.6 cents to 1,044.5 cents.
In a strategic move underscoring its confidence and adaptability, Clicks announced plans for expansion in the 2024 fiscal year. The company aims to open 40 to 50 new stores and pharmacies, emphasizing its commitment to growth despite prevailing challenges. This forward-looking initiative serves as a testament to Clicks’ ability to thrive in the face of adversity, positioning the group as a resilient force in the market.
Technical
On the 1D chart, the breakout from the descending channel has been sustained, with the share price recently exceeding the 25-SMA (green line) in confirmation of the bullish presence. Resistance at R309.45 prevented additional upside momentum on Tuesday, but the price looks poised to retest this level as the bulls remain in control.
If this resistance fails to prevent a breakout the second time around, the price could move toward higher resistance at R318.57 in the upcoming sessions. From the late October bottom, the 161.8% Fibonacci extension could then become a potential level of interest at R323.00.
However, the RSI indicates overbought conditions, and if the price fails to exceed R309.45, the uptrend could become exhausted. A pullback toward R295.85 then becomes likely for traders to realize some profits and anticipate the next directional price move. As we advance, an additional breakdown could trigger a trend reversal toward R281.96 and R276.77.
Summary
Since its recent earnings report, where the group’s bottom line advanced by double digits, Clicks has seen its share price rise at a rapid pace over the last month. As we advance, the resistance at R309.45 could be pivotal in determining whether the recent momentum will continue or whether a trend reversal is imminent.
Sources: Koyfin, Tradingview, Clicks Group Limited
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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