By Peet Serfontein & Zimele Mbanjwa.
Enovix Corp is in the business of designing, developing, manufacturing, and commercialising advanced lithium-ion batteries. Founded in 2007, the company specialises in silicon-anode lithium-ion battery technology. It has developed a proprietary three-dimensional (3D) architecture that increases the energy density and maintains high cycle life of the batteries.
Enovix's mission is to power the technologies of the future, addressing the growing demand for more efficient and durable batteries in various applications, including IoT devices, mobile and computing devices, and electric vehicles.
Technically, the stock is developing a symmetrical triangle pattern which makes for a compelling investment opportunity (see the black converging trendlines as well as the insert). While the symmetrical triangle itself is neutral, a breakout above the upper boundary of the triangle is a bullish sign. Investors often look for a decisive close above the triangle's resistance (upper trendline), with increased volume as confirmation of a bullish breakout.
The stock is trading just below its 200-day simple moving average of ~$13.25, making this a contrarian trade.
Emerging upside momentum, according to the MACD indicator, supports a bullish stance. The recent downward movement of the on-balance volume indicator is a concern, however.
Share Information
| Share Code | ENVX US |
|---|---|
| Industry | Capital Goods |
| Market Capital (USD) | 1.98 billion |
| One Year Total Return | 47.80% |
| Return Year-to-Date | -5.91% |
| Current Price (USD) | 11.78 |
| 52 Week High (USD) | 23.90 |
| 52 Week Low (USD) | 7.95 |
| Financial Year End | December |
| The stock price has come under a bit of pressure recently but has seen robust growth over the last year. Various technical indicators suggest an imminent recovery. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | -0.87 | -0.94 | -0.76 | -0.05 |
| Growth (%) | -7.59 | 18.59 | 93.18 | |
| Dividend Per Share (USD) | - | - | - | - |
| Growth (%) | - | - | - | |
| Forward PE (times) | - | - | - | |
| Forward Dividend Yield (%) | - | - | - | |
| Earnings are on a recovery path even though further weakness is expected in the short term. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | CARZ - Buy (Continue to hold) |
CVX - Buy (Continue to hold) |
LKQ - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 53.61 | 147.89 | 47.92 |
| Current | 55.82 | 154.00 | 49.86 |
| Movement | 4.1% | 4.1% | 4.0% |
|
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 $54.70. Exit the trade around 22 May 2024. |
The stock price is holding above key support, and this remains attractive. Upside price momentum is supportive.
Our profit target is $167, with a trailing stop-loss of $147.30. Exit the position around 28 June 2024. |
The development of a large bullish flag pattern remains of interest. The stock remains below its 200-day moving average. Upside price momentum supports the trade idea.
Our profit target is $55, with a trailing stop-loss of $48. Exit the position around 22 May 2024. |
| Share Name and position | DAY - Buy (Continue to hold) |
HSY - Buy (Continue to hold) |
BDX - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 69.45 | 191.47 | 239.07 |
| Current | 71.54 | 193.57 | 240.66 |
| Movement | 3.0% | 1.1% | 0.7% |
|
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.
Our profit target is $80, with a trailing stop-loss of $67.50. Exit the position around 8 May 2024. |
The formation of a fifth wave (per Elliot wave analysis) in the stock price remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Upside momentum has halted, which is a concern.
Our profit target remains at $220, with a trailing stop-loss at $186.20. Exit the trade by 26 April 2024. |
The presence of a well-established price range remains of interest. The stock is remains below its 200-day moving average. Upside price momentum supports the idea.
Our profit target is $265, with a trailing stop-loss of $231.10. Exit the position around 24 April 2024. |
