By Peet Serfontein & Zimele Mbanjwa.
Allegion is a global provider of security products and solutions to end users in commercial, institutional, and residential facilities worldwide, including the education, healthcare, government, hospitality, retail, commercial office and single and multifamily residential markets. It offers a range of leading brands, such as CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin. Allegion has a presence in more than 130 countries and employs around 12 000 people.
In the first nine months of 2023, the company continued to experience stable demand for non-residential products and services in the Allegion Americas segment. Revenue from electronic security products also remained strong globally as the benefits from measures taken to address supply chain challenges in prior years begin to materialise.
Technically, the price appears to be retracing from major support, which makes the stock a promising investment opportunity (see the black trendline on the main chart). Buying at or near this point can be seen as a lower risk entry, as the price is less likely to decline significantly further. A price retracing from a major support level often indicates a potential reversal in trend.
The stock price is just below its 200-day simple moving average of $108.70.
Upside price momentum, according to the MACD indicator as well upward trajectory of the On-balance Volume indicator, supports a bullish stance.
Share Information
| Share Code | ALLE |
|---|---|
| Industry | Capital Goods |
| Market Capital (USD) | 9.26 billion |
| One Year Total Return | -1.77% |
| Return Year-to-Date | 1.48% |
| Current Price (USD) | 105.52 |
| 52 Week High (USD) | 128.36 |
| 52 Week Low (USD) | 95.94 |
| Financial Year End | December |
| YTD performance has been subdued, but upside price momentum is expected. The stock price may experience moderate price fluctuations in the future. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 5.69 | 6.86 | 7.16 | 7.72 |
| Growth (%) | 20.58 | 4.29 | 7.91 | |
| Dividend Per Share (USD) | 1.64 | 1.80 | 2.51 | 2.80 |
| Growth (%) | 9.76 | 39.61 | 11.38 | |
| Forward PE (times) | 15.38 | 14.75 | 13.67 | |
| Forward Dividend Yield (%) | 1.71 | 2.38 | 2.65 | |
| Earnings growth is expected to be robust during the current financial year. However, some moderation in growth is expected from FY24. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | AMZN - Buy (Continue to hold) |
KO - Buy (Continue to hold) |
LW - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 138.07 | 55.78 | 98.14 |
| Current | 146.88 | 58.66 | 100.62 |
| Movement | 6.4% | 5.2% | 2.5% |
|
A developing megaphone pattern remains of interest. The stock remains above its 200-day moving average. The trade is backed by upside momentum.
Our profit target remains at $200 with a trailing stop-loss at $138. Exit the trade around 23 February 2024. |
The price has been consistently recovering within the lower range of an upward-trending linear regression channel. The price remains below its 200-day moving average, and the trade idea is considered a counter-trend strategy, supported by upside price momentum.
Our profit target remains at $61 with a trailing stop-loss at $56.60. Exit the trade around 12 January 2024. |
Classic geometric angles remain of interest. The stock remains just below its 200-day moving average and the trade idea is regarded as a counter-trend strategy. Emerging upside momentum is supportive.
Our profit target remains at $112 with a trailing stop-loss at $93. Exit the trade around 24 January 2024. |
| Share Name and position | HPE - Buy (Continue to hold) |
CWH - Buy (Continue to hold) |
XLP - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 15.74 | 21.50 | 70.66 |
| Current | 16.91 | 21.85 | 70.48 |
| Movement | 7.4% | 1.6% | -0.3% |
|
A price developing an incomplete ascending triangle pattern remains of interest. The stock is testing the 200-day moving average, with fading downside momentum remaining supportive.
Our profit target remains at $18 with a trailing stop-loss at $15.15. Exit the trade around 23 February 2024. |
The price appears to be developing a right-angled broadening bottom pattern. The stock is just below its 200-day moving average. The trade is backed by upside momentum.
Our profit target remains at $27 with a trailing stop-loss at $19.30. Exit the trade around 23 February 2024. |
A price retracing from the lower range of Bollinger bands remains of interest. The ETF remains below its 200-day moving average. Upside price momentum remains supportive.
Our profit target remains at $76.00 with a trailing stop-loss of $69. Exit the trade by 9 February 2024. |
