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A2M - The A2 Milk Company

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One of my picks for the 2024 trading competition.

The primary reason for choosing it is that it's one of the stock identified by feeding longer term price data into a trading system designed for shorter timeframes. Bearing in mind this approach hasn't been tested, so it's a gamble albeit one without real money (well, apart from the potential prize....).

That plus the plausible double bottom on the chart with a low at $3.90 in May 2022 and at $3.70 in November 2023.

Time will tell but it's speculative.....
 

This looks positive Smurf.

 
Sean K said:
This looks positive Smurf.
Click to expand...
So far, so good.

Nothing's changed thus far, using the same criteria as I used to pick this stock for the 2024 competition it still comes up so "no news to report" other than that so far, it's going up.
 
So far the rise continues and whilst I'm not holding this stock with real money, had I bought it (which in hindsight I should have.....) then at this point my trading system would have me continuing to hold it.

Perhaps the only concern at this point, in the context of me having picked this for the full year trading competition, is the pace of the rise is likely not sustainable and may not look so good by the end of the year. OK so far though.
 
As a further update, so far, so good. Applying the system I'm using I'm still notionally in, no sell has been triggered, so all good so far.

Unrelated to the stock itself but a deficiency of the approach I've used for the 2024 trading competition is my adaptation of a shorter term trading system to longer term data doesn't seem to be producing any triggers to raise the stop. At present it's notionally set about 40% below the current price with no trigger to raise it. That's an identified weakness of the approach but one that's unrelated to A2M itself.
 
Weekly chart update to show what @Smurf1976 is talking about, a great run so far and a great pick.

 
Price action this month has been broadly sideways although the overall market has fallen so that's perhaps not surprising. Down for the first half then trending up for the second half thus far.

Trading it on the basis I've used to pick it for the competition, the trade would still be open. Bearing in mind I've simply adapted a shorter term system by feeding monthly data into it but so far, so good.
 
Smurf1976 said:
Price action this month has been broadly sideways
Click to expand...
Which thankfully hasn't continued.

The share price is up just over 20% from the close at the end of April so no complaints from me there.

I don't hold the stock with real money, though some observations about its recent price action have just given me a trading concept that I'll explore further (in the context of any stock not just this one) to see if it's useful or not.

The one question is whether it meets resistance at the current level? See chart:



Note time period is weekly.
 
No news from the company this month, literally no announcements, and unfortunately for me the price has dropped back somewhat, thus far failing to break through resistance as per the chart previously posted.

 
During the month of July A2M has resumed its uptrend but remans below the high set in late May.

Nothing much to add beyond that really, at least it's going not down.

 
A2M up $NZ 0.37 this morning 11:00 AM NZ time

 
mullokintyre said:
A2M down around 20% today.
Click to expand...
Yes, quite a drop in share price and thus far no real recovery.

Another issue I'll add, reading from the company's announcement on 19 August, is they've shifted from coal to electricity as the heat source for manufacturing operations in New Zealand.

Now before anyone thinks I'm going off topic into irrelevant engineering details, the point of relevance is that electricity prices in NZ have soared in recent weeks. So the cost of electricity to run that facility is now far more expensive than it was until recently, it's far higher than they'd likely have assumed when making the investment decision. What impact that has on the company's overall finances I've no idea, I don't know how significant that is to their overall costs, but it's an additional cost nonetheless. It may have some relevance depending on how long the high prices persist.

Back to the company itself, well the chart says it all:

 
An interesting end to the month for the A2 Milk Company with the stock placed in a trading halt on 27 September pending an announcement.

Prior to that, the price was up significantly so the announcement will be ? Good one assumes?

 
Now trading today



Response to Price Query letter today



 
Knobby22 said:
The rumour as reported on the ABC was that the takeover of the manufacturing facility was taking place, hence the trading halt.
I think they must have not reached a deal.
Don't own.
Click to expand...
And the share price has dropped away somewhat following that. For those holding, the spike on 27 September was a good time to have exited, at least for shorter term investors. A high of $6.77 on that day versus $5.75 at present,

 
Following stronger-than-expected sales and higher dairy prices globally, a2M now expects revenue growth between 5 and 9 per cent in FY25 from a year ago, up from previous guidance of around 5 per cent.

Earnings before tax margin are still expected to be broadly in line with FY24.

a2 Milk has established a dividend policy effective immediately with a payout ratio range of between 60 per cent and 80 per cent of net profit.
 
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