Santos Limited : Fill the gap
Entry price | Target | Stop-loss | Potential |
---|
A$11.85 |
A$0 |
A$12.4 |
+100% |
---|
Santos Limited explores and produces natural gas, crude oil, condensate, naphtha and liquid petroleum gas. The Company conducts major onshore and offshore petroleum exploration activities at oil and gas fields in Australia (Cooper/Eromanga Basins), the United States (Gulf of Mexico), Indonesia and Papua New Guinea. The Company also transports crude oil by pipeline.
The fundamentals remain very fragile. The security seems highly overvalued compared to other securities in its sector with a price earnings ratio of 20 times FY earnings estimates and a ratio “EV/sales” of 4.5x.
Graphically, the share is in a period of technical rebound that allowed it to reach the AUD 12.1 mid-term resistance. This area could trigger a sell signal for investors in case of profit-taking. Furthermore, the rallying of the AUD 10.1 support area will be considered for upcoming sessions.
Due to the technical configuration and a bad fundamental situation that does not justify the current valuation of the company, investors can open a short position close to the AUD 12.1 resistance. The price target is set at AUD 11 moving averages’ area, and a stop loss will be placed above AUD 12.1.
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