By Peet Serfontein & Jalpa Bhoolia.
Old Mutual is the largest life insurance company in South Africa (SA) and has a dominant share in the mass foundation (lower end) and corporate markets. The group offers a wide array of financial services to individuals, corporates, and institutions across 14 countries.
Technically, a price that acts as a major support, makes for an attractive investment option (see the black trendline on the main chart as well as the insert).
When a share price breaks through a major resistance level, that level often becomes a support. In a bullish scenario, the new support level acts as a foundation for upward momentum. After this breakout, the price may pull back to the previous resistance level (now acting as support). A price that holds above the new support level, forming higher lows, signals strength and further upside potential. Higher volume during the breakout phase adds credibility to the upward price movement.
The stock is trading in a markup phase of the Wyckoff price cycle, characterised by growing market interest and strong buying pressure (volume). This supports our bullish stance.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R15, which classifies our profit target of R14.40 realistic.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R12.80.
Expect moderate volatility in the price.
Share Information
| Share Code | OMU |
|---|---|
| Industry | Insurance |
| Market Capital (ZAR) | 59.26 billion |
| One Year Total Return | 8.69% |
| Return Year-to-Date | -0.71% |
| Current Price (ZAR) | 12.37 |
| 52 Week High (ZAR) | 13.20 |
| 52 Week Low (ZAR) | 9.95 |
| Financial Year End | December |
| Several technical indicators are supportive of a positive share price move. The stock remains above its 200-day simple moving average (SMA). |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 1.29 | 1.36 | 1.52 | 1.62 |
| Growth (%) | 5.50 | 11.39 | 6.60 | |
| Dividend Per Share (ZAR) | 0.81 | 0.86 | 0.95 | 1.00 |
| Growth (%) | 5.56 | 11.35 | 5.04 | |
| Forward PE (times) | 9.09 | 8.16 | 7.65 | |
| Forward Dividend Yield (%) | 6.91 | 7.70 | 8.08 | |
| Old Mutual seems attractively priced relative to its peers, with strong earnings growth expected over the forecast horizon. We also regard the 12-month forward dividend yield of over 7% as attractive. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | TBS - BUY (Continue to hold) |
WHL - BUY (Continue to hold) |
ANH - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 224.91 | 60.82 | 1088.49 |
| Current | 240.04 | 63.00 | 1148.71 |
| Movement | +6.7% | +3.6% | +5.5% |
|
A price at major resistance is of interest. Remains above its 200-day simple moving average. Upside price momentum regained some strength, which is a highlight.
Our profit target is at R260, with a trailing stop-loss at R215.20. Exit the trade on 28 April 2025. |
A price that appears to be building a base remains of interest. Remains just above its 200-day simple moving average. Fading upside price momentum is concerning.
Our profit target is R71 with a trailing stop-loss level at R59. Exit the trade on 25 November 2024. |
A developing ascending triangle pattern remains of interest. Testing its 200-day moving average. The start of upside price momentum is encouraging.
Our profit target is R1 235 with a trailing stop-loss at R1 090. Exit trade on 28 October 2024. |
| Share Name and position | SHP - BUY (Continue to hold) |
DCP - BUY (Continue to hold) |
RNI - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 292.78 | 34.52 | 481.36 |
| Current | 299.38 | 35.51 | 481.36 |
| Movement | +2.3% | +1.3% | +6.8% |
|
A share that appears to be in a phase of low volatility remains of interest. Remains above its 200-day simple moving average. Fading upside price momentum continues to be a concern.
Our profit target is R317 with a trailing stop-loss at R271. Exit the trade on 1 September 2025. |
The stock continues to display higher highs and higher lows and remains above its 200-day simple moving average. Downside price momentum is a concern.
Our profit target is R39 with a trailing stop-loss at R33. Exit the trade on 23 September 2024. |
The stock that remains in a developing symmetrical triangle pattern remains of interest. Trades above its 200-day simple moving average. Fading upside price momentum is a concern to the trade strategy.
Our profit target is at R547, with a trailing stop-loss at R462. Exit the trade on 16 December 2024. |
