The swing from loss to profit is always a key fundamental inflection point of note. This is what we have just been treated to at engineering / infrastructure group Costain. Indeed, turning around from a £13m loss to a near £33m profit for 2022 would be impressive anyway. It is all the more impressive if you add in the horrors from Ukraine to the cost of living crisis. On this basis one would imagine that it is not only the heavy brigade as far as stock market investors who would be looking at Costain a being a buy on the basis of its performance turnaround, the y along with the rest of us will be looking to the £1bn revenue pipeline as security that the company is set fair for some time to come.
Interestingly enough, we see with Costain’s fundamental turnaround, that it has been matched by a charting / technical turning point as well. The highlight here has been the gap through a line of resistance which has been in place from as long ago as August 2021 versus the 46p level. The implication is that while above the recent support area at this line, we could be treated to strong progress up to the top of a rising trend channel which can be drawn from as long ago as last July. The resistance line of the channel is heading towards 65p, and this could be hit as soon as the end of May, and perhaps rather sooner. The fact that the shares have managed to stay above the blue 50 day moving average on the daily chart now at 44p for the whole of 2023 to date – even on dips, only serves to underline the technical strength of Costain – to match the fundamentals.
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