Cable & Wireless (C&W), an IC Insider BUY RATED stock, traded 7,481,913 shares closing at 32 cents on Thursday, following the release of the announced acquisition of Columbus International operation and news of continued strong growth in new cell customers.
Trading on Wednesday, resulted in 5,310,349, units changing hands, between 25 and 28 cents while there were 5 million units on offer at 28 cents, with the bid at 25 cents, to buy 5,794,204 units. With all the news fully disclosed, 8 brokers had bids to buy almost 10 million shares at 36 cents each on Friday. Trading was attempted at 37 cents, but the 15 percent limit resulted in cancelation of the trades.
What is clear is that the price will most likely close on Monday above the bid price of 36 cents, with 41 cents, the maximum possible it can trade, likely to be the close. The big question to be answered is, what price will the stock reach to induce fair stability in the price. Without earnings or even positive net asset value that could be used to value the stock, investors either has to use future estimated earnings or income per share or some other such method to value the stock. But other calculations would be needed to arrive at an approximate level. The other approach is the use of technical assessment. Below the likely price levels are stated before some form of resistance to buying takes place. The present supply demand scenario suggest that the recent high of 70 cents will be taken out sooner than later.
CWC Communication has not yet disclosed how they will treat with Flow within the group. One can speculate as to what may happen sometime in the future, one possibility is that Cable & Wireless will collapse the Flow operations into the local Cable & Wireless entities, thus cutting cost. What is more important, for investors, is what is taking place at C&W locally. With continued strong growth in cellular customers, the company has around 830,000 cell customers and could reach around 900,000 by year end. At this level and the possibility of further growth, the company should be making decent profit, between this fiscal year and the 2016. IC Insider is expecting the September results to show a reduced operating loss, than the $600 million incurred in 2013, with the possibility to either break even or making a small profit for the year to March 2015.
Heavy buying| At the end of trading on Friday, C&W had 9,997,276 units to buy at 36 cents and just under 232,000 units to sell at 50 cents and only 4,849,062 in total is on offer between 50 and $1. Earlier this year there was not much volume that was available before the price got to 70 cents and then selling came in, more importantly buying thinned out above 50 cents.
Earlier this year| The current bid offer position is pretty similar to that of February 21 this year, when the bid was at 32 cents. Then there were only 56,766 units on the bid at 32 cents and a small 2.7 million on the offer between 38 cents and 45 cents, with the next offer after that at $3.50. That was weeks before the price shot up to 70 cents on limited volume. This time around, buying is more board based with higher volume on the buy side and the supply just a little more than in February. Clearing the way for continued bullishness, is that supply was taken out below 70 cents although some purchases could be sold back to the market in profit taking having been recently bought at relatively low prices.
Technically, 70 cents looks like the first serious barrier to upward price movement. The next possible resistance would be 80 cents and then $1, $1.35 and $1.60. With supply tight, if the September or December results show much improvement in the bottom-line, there could be sufficient buying interest to move through the lower points between now and the first half of 2015.