LON:BEG | Begbies Traynor Group BEG – Market Sentiment

31st Jan '22 by Revs8

10 comments 885 reads

There were some emotive comments, both for and against Begbies Traynor (LON:BEG), in the comments of the SCVR last week. I don’t profess to have any greater insight on the fundamentals but I use the share price charts to look for clues on wider market sentiment.

I’ve found that the charts also show an interesting divergence in opinion, which has resulted in a stalemate that may signify a buying opportunity or a sell warning depending on whether the bulls or bears win out.

The fundamentals of Begbies Traynor (LON:BEG) are well covered by the SCVR report so I suggest if you are interested in Begbies Traynor (LON:BEG) then look up the discussion section on the Begbies Traynor (LON:BEG) Stockopedia page for fundamental insights from Paul.

My understanding of Begbies Traynor (LON:BEG) is that it is a company that should benefit from an increase in the levels of UK company distress. It is an acquisitive company that has used share issuance to fund purchases. If they have bought wisely then these purchases might result in significant profit and growth. However if they have not then there might need to be a write down in the value of the goodwill.

My aim here is to give my understanding of the share price sentiment indicated by the charts.

Background 2-Year Chart History

The chart for Begbies Traynor (LON:BEG) shown above covers the period from the start of the Covid pandemic to Friday 28^th Jan 2022.
The onset of the pandemic resulted in a price drop and I have labelled the death cross that formed as the 50dMA crossed below the 200dMA (some people prefer the 30/200dMA but it makes little difference here).
The share price found support around the 60p mark and rebounded forming a golden cross in May 2020. This also coincided with what can now be seen as the top of a rising channel. (Example where golden crosses don't always indicate further price increases).
The remainder of 2020 the share price declined back towards the bottom of the channel at around 90p.
In January 2021 another golden cross formed signifying the start of strong bullish sentiment propelling the share price back to the top of the channel at 150p in June 2021 (a golden cross…

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wattanut

31st Jan '22

Hi Revs8

I'm in a slightly different position from you, in that I have been holding since Nov 2020. I use a weekly charts for my buys and sells and as the price has already dropped through a flattening 40 week ma and through support last week, your trend line forming the bottom of the channel will be it for me as it is eating at my profit.

I think the thing that bothers me is the increase in volume on the last 4 down weeks.

Revs8

Hi Wattanut

Good to get the perspective of someone who already holds. Looks like you bought at a good time.
I can’t fault your logic. If the price loses the channel then it could go further and might suggest a structural problem rather than market fluctuations.
Personally, I feel that corporate distress is about to go through the roof and unless the government steps back in then there will be a lot of business for companies that deal in this area.
Id been considering a couple of companies in this area and the potential buying opportunity in Begbies Traynor (LON:BEG) made up my mind.

Breakout Trader

Hi guys, I agree that we're at an important junction here.

Taking a wider view, my Price target is 200p, basically re-testing the previous ATH.

We are on the bottom edge of the channel, but need a fairly sharp reversal to start pushing up again. Difficult in the current market, but Begbies is theoretically counter-cyclical and does best when other companies are failing.

I'd like to see a move above 130p to be more bullish, that would give approx 50% upside if we hit 200p.

A break below the channel is a red flag and I too would be looking to exit in that event.

There will need to be some positive news to push the price back above the 127p but that may only need to be the increasing rates of company distress. Any further government support could have the opposite effect.

With the sentiment at such a low point there is plenty of room for the price to build up momentum if good news is forthcoming.

If the acquisitions prove to be profitable then it seems reasonable that the company will be worth more than the previous ATH at some point in the future so it makes sense to target 200p. I'll certainly be happy if you are correct :)

I agree with you about the counter- cyclical idea, but I do wonder if they are marked down for always being the bearers of bad news.

Rusty2

1st Feb '22

The broker forecast profit figures for Begbies Traynor (LON:BEG) on Stockopedia were incorrect, if you look at last weeks print, you will see there were down around £5m, although the EPS figures were unchanged. I queried this and the provider has amend the figures now. I wonder if that had any affect on the share price.

Well spotted Rustbucket.

A benefit of being in this community is that PI's are keeping tabs on companies and information. As you say the EPS and forecast PE were correct. I noted the forward PE and thought that looked low if the company starts to show growth.

It is a concern that there does seem to be quite a bit of misinformation being supplied, this has been reported about on other stocks. I'm sure we pick some but probably only the tip of the iceberg. I only spotted it as it was obvious, the suppliers of this should be checking it also, forecast profits halve but EPS stays the same.

Looks good value but I'm overweight in Begbies Traynor (LON:BEG) already and there are other options that look too cheap to me such as Robert Walters (LON:RWA)

How interesting that you mention Robert Walters (LON:RWA) and then Roland does a review.

The share price chart looks similar to Begbies Traynor (LON:BEG) . Sitting at a critical support level. RWA just lost the 200dMA and someone is selling. There are buyers too.

I've saved this price chart and will be keeping an eye on RWA. A 2022 forecast will make a big difference.

3rd Feb '22

See new update. Will be interesting to see how Begbies Traynor (LON:BEG) plays out over next few weeks.

Begbies Traynor Group BEG – Market sentiment

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Revs8

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