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Reiterate Buy Avation (AVAP) says VectorVest. Strong rising trend supported by steady growth in revenues and pursuit of growth
Singapore-based Avation PLC, (AVAP.L) is a specialist commercial passenger aircraft leasing company managing a fleet of aircraft which it leases to airlines across the world. AVAP customers include Flybe, Virgin Australia, Thomas Cook, Condor, Air France, Air Berlin, Air India, Vietjet Air, Fiji Airways and Mandarin Airlines. Avation also has a subsidiary that supplies aircraft parts and spares to a range of operators, internationally.
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On Friday 30 June, 2017, AVAP said its leasing business was operating in line with expectations. For the year ended 30 June 2017 management estimates revenues will be $94m (unaudited) with a margin for error of 0.5%, and estimates leasing revenues have grown approx 32% year on year. In order to recognise shareholder ownership as it continues the development of the business, an interim dividend of 6.00 US cents per share has been approved for the year ended 30 June 2017, an increase of 85%. Executive Chairman Jeff Chatfield, said: “Avation is both diversifying its aircraft fleet and also pursuing growth and is currently assessing additional aircraft acquisitions.”
Following our article of Nov 23rd 2016, AVAP has once again flagged across key VectorVest metrics following the trading update outlined above. The Relative Timing (RT) trigger, which flagged AVAP in the Nov 2016 article once again rates the stock at 1.45, which is excellent on a scale of 0.00 to 2.00. Since our last article, shares have since hit and passed our then target of 226p, but despite this, the VST-Vector (VST) master indicator for ranking every stock in the VectorVest database logs a VST rating of 1.22 for AVAP, which is still good on a scale of 0.00 to 2.00. The VST is computed from the square root of a weighted sum of the squares of Relative Value (RV), Relative Safety (RS), and Relative Timing (RT).
The chart of AVAP is shown below with the original call last November marked. The share has recently broken out of an ascending triangle pattern and is on a BUY recommendation on VectorVest. Of note is the last reaction low charted on the 3rdAugust 2017. This low is higher than the last major high (as defined by the highs of the ascending triangle. This expansion indicates that a strong trend is in process. Classical charting techniques indicate a target for AVAP.L in excess of 300.
Summary: Trading now at 246p, AVAP shares have both hit and passed our Nov 2016 target of 226p. Supported by the exceptionally strong charting configuration, steady growth in revenues and stated pursuit of growth, VectorVest continues to view AVAP as a solid investment opportunity. As such we reiterate our buy rating, and raise the target price to the current VectorVest valuation of 280p.
Dr David Paul
August 9 2017
Readers can examine trading opportunities on AVAP and a host of other similar stocks for a single payment of £5.95. This gives access to the VectorVest Risk Free 5-week trial, where members enjoy unlimited access to VectorVest UK & U.S., plus VectorVest University for on-demand strategies and training. Link here to view.
FREE! For free VectorVest analysis on any stock, go to this link here
VectorVest Unisearch
On VectorVest a simple search using the Unisearch tool will quickly find shares that are undervalued with good fundamentals that have just issued a Buy recommendation. This will give the active trader a short list of many high probability trading opportunities each week. Traders now have the opportunity to spend five weeks discovering VectorVest’s unique simplicity, automation and independent guidance. Just £5.95 buys a 5 week trial to enable deep exploration, or how the system can assist in smarter trading in as little as 10 minutes a day. Powerful tools. Proven strategies. Unique Perspectives.
Link here for more info and to set up a trial.
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Avation Plc (AVAP) – VectorVest rates as buy following Sept 2016 upward revaluation
Avation PLC, (AVAP.L) Avation PLC is a specialist commercial passenger aircraft leasing company. A fleet of 38 aircraft are leased to commercial airlines globally: company segments include aircraft leasing and business procurement. The Company’s fleet includes Airbus A320 and A321 narrow body jets, ATR 72 twin engine turboprop aircraft and five older Fokker 100 jets. It owns, through its subsidiaries, a range of commercial passenger jet aircraft, which are leased to various airlines in Europe, Asia and Australia. The Company’s subsidiaries include Avation.net Inc, which is engaged in procurement; Avation Capital S.A., which is engaged in financing, and Capital Lease Aviation Limited and MSN429 Leaseco Limited, which are engaged in Aircraft leasing.
On September 8 2016, AVAP reported record revenue and profit in its tenth year as a public company. Lease revenue increased by 25.0% to $71.2m, while operating profit grew by 35.6% to $45.6m. Total profit after tax increased 37.6% to $18.3m, and Earnings per share (EPS) grew by 42.5% to 34.2 cents. AVAP raised the interim dividend by 8.3% to 3.25 US cents. Exec Chairman Jeff Chatfield said AVAP, “is well positioned for continued growth.”
AVAP appeared across a number of VectorVest value metrics in early 2016. Relative Timing (RT) is a fast, smart, accurate indicator of a stock’s price trend, and AVAP’s RT rating of 1.53 is excellent on a scale of 0.00 to 2.00. The company’s Growth to P/E Ratio (GPE), which compares earnings growth rate to P/E ratio, sees a GPE rating of 1.59 for AVAP. A stock is commonly considered to be undervalued when GPE is greater than 1.00 and overvalued when GPE is below 1.00.
VectorVest revalued the share sharply upwards in September 2016 and at present the share is trading well below its valuation of 227p.
A weekly chart over 3 years of AVAP is shown above. Since November 2014 the share has traded in a range and has completed what chartists refer to as a “rounded bottom”. This pattern was first discussed by William J O’Neil in his great book “How to make money in stocks”. O’Neil referred to the pattern as a cup and handle formation and it was the basis of his trading plan and subsequent trading success. The rounded bottom is the cup and the first rising bottom is the handle. I have marked the best entry from the pattern as the share broke above the high point of the handle. Technically the break is still young and the move upwards from a 2 year consolidation has in all probability a long way to go.
Of note is the low Relative Safety of the share at 0.86. As this metric is below 1 on a scale between 0 and 2 it indicates that there have been surprises, missed targets and expectations in the past. The opportunity in AVAP is thus for those who understand and can manage risk without fear or hesitation.
Summary: AVAP’s exceptional share price performance since the September results announcement has gone a long way to closing the value gap. VectorVest currently values the share at 226p while the share is trading at just below 200p. A pullback to “kiss” the November 2014 high at 180p would be an ideal entry for aggressive traders
David Paul
November 23rd 2016
Readers can examine trading opportunities on AVAP and a host of other similar stocks for a single payment of £5.95. This gives access to the VectorVest Risk Free 5-week trial, where members enjoy unlimited access to VectorVest UK & U.S., plus VectorVest University for on-demand strategies and training. Link here to view.
FREE! For free VectorVest analysis on any stock, go to this link here
VectorVest Unisearch
On VectorVest a simple search using the Unisearch tool will quickly find shares that are undervalued with good fundamentals that have just issued a Buy recommendation. This will give the active trader a short list of many high probability trading opportunities each week. Traders now have the opportunity to spend five weeks discovering VectorVest’s unique simplicity, automation and independent guidance. Just £5.95 buys a 5 week trial to enable deep exploration, or how the system can assist in smarter trading in as little as 10 minutes a day. Powerful tools. Proven strategies. Unique Perspectives.
Link here for more info and to set up a trial.