Vipshop Holdings Limited : Overvalued stock
By Camille Chretien
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
US$30.26 | US$0 | US$31.8 | +100% |
The company has strong fundamentals and sales are estimated to rise by more than 300% between 2012 and 2015. However, the security has never consolidated and has a very high P/E ratio of 39x for 2013.
The consolidation phase has begun and may continue for a while. Prices has recently broken down the 20-week moving average, which used to support the stock for many months. Moreover, the slight bullish movement, started at the end of June should be stopped by the 50-day moving average. Thus, prices should come back to the USD 25.5 support.
As a consequence, most active investors can take a short position at the current price in order to benefit from the overpricing of Vipshop Holdings 'stock. The first bearish objective will be USD 25.5. A stop loss must be placed above the 50-day moving average, currently around USD 30.7.