SEE:STI up 0.71% following better-than-expected FY2020 GDP growth
“As shown on the RHS chart, some of the share price movements in the past few weeks have resulted in a number of stocks being firmly embedded in the overbought territory - “overbought” being defined as current share prices being at a premium to our fair value or target price,” says UOB KayHian analyst Adrian Loh. He sees the main culprits as being SMM, SIA Engineering (SIAEC), SATS, CDL Hospitality Trust (CDLHT) and ARA HTrust.
All these counters are from sectors badly hit by the Covid-19 pandemic, with signs of future normalcy considered an upside for their future prospects. Loh therefore sees them as potentially benefiting the most from a “faster-than-expected economic recovery”.
Outperformance by market stragglers has not meant that the best performing stocks since March 20 have given up their gains. Sembcorp Industries, CDL Hospitality Trust, Far East Hospitality Trust, SATS and Genting remain in the lead, averaging a 96% return against the STI’s 31% return over the same period. REITs have been especially successful, taking up 22 out of the top 20 stocks on the STI.
See also: SAC Capital initiates ‘buy’ on Sanli Environmental after $105.3 mil contract win from PUB
For more stories about where the money flows, click here for our Capital section
“There are less overbought stocks in the small/mid-cap sector with only seven stocks trading at a premium to our fair value or target price. These are Jumbo, Micro Mechanics, UnUsUal, Penguin International, BRC Asia, iFAST and Valuetronics,” Loh observes.
The UOB KayHian analyst highlights ten stocks in the broker’s large-cap coverage universe with the highest upside to target prices. The list is diversified across REITs, financials, healthcare, plantations and tech sectors. These are Frasers Capital Trust, Keppel REIT, OCBC, First Resources, Wilmar International, Yangzijiang, Venture Corp, Raffles Medical, Ascendas REIT and Keppel Corp.
As of 2.12pm, the Straits Times Index is trading 0.18% higher at $2,862.55.
