FPH - Fisher Paykel Healthcare.

[quartzpurple]

Hi Colin,

Unfortunately, good company does not always mean good investment. It is always much easier to do a business analysis than finding out whether there is still any upside in share price that can be exploited.

[COLIN]

quote:Originally posted by quartzpurple

Hi Colin,

Unfortunately, good company does not always mean good investment. It is always much easier to do a business analysis than finding out whether there is still any upside in share price that can be exploited.

Agreed. Too true. Perhaps I should now reveal that I sold about half of my holding at 460, after concluding that there had been too much overshoot, and am now pondering a re-entry point. However, I think there is still plenty of grunt left in the longer-term uptrend and am finding it hard to justify not getting back into a buying mood again.
I really am a "buy the business, not the share" type of investor, but I am not silly about holding on at all costs when there is a clear medium-term downtrend.

[Phaedrus]

Colin, you say "I realise that the TA people will dwell on the recent (slight) price weakness......" WRONG!!!!

One of the many good things about charts is that they enable you to easily assess the magnitude and thus the significance of any price movement. It is easy to see from the attached chart that the weakness Colin mentions is quite insignificant. It has less than half the magnitude of previous retracements - ones that have not affected the overall long-term uptrend at all. Dwell on such barely discernable "weakness"? Not likely!

FPH is in a clear long-term uptrend and has been for many years. On page 1 of this thread, I observed that "The secondary trends of FPH are insufficiently well defined for this to be a good trading stock". This, then, is a good "long-term buy and hold" stock. Note that this does NOT mean that you therefore have no need for any exit strategy. The chart below shows 3 fairly conservative indicators that would provide appropriate Sell signals. These would be generated by :-
(1) A break of the long-term trendline.
(2) A break of the long-term moving average.
(3) A break below the trailing stop.
It is easy to see that current price action is well above all of these indicators - so far above, that trend-followers would have no need to monitor this stock very closely at all right now.


(Quartzpurple) "It is always much easier to do a business analysis than finding out whether there is still any upside in share price that can be exploited".
Perhaps, but in the final analysis, it doesn't matter a damn how you or I value this stock. It's the market that decides how high FPH will go. You would be foolish to sell simply because it had reached your own personal valuation if the uptrend was still strong. Similarly, you would be foolish to hold on because it hadn't reached your valuation if it had peaked and was in a clear downtrend.

[scamper]

Good afternoon Phaedrus and chums!
I see that when you started this post last May, fph shot up and down around 430.
Given that it has been hovering between 420-430 for the last couple of months, do you now consider it better value.
fph reported trading revenue up 28% for its half year to sept 06.
time for a dabble? [8)]

[Phaedrus]

Hi Scamper, I'll leave it to others to give their personal estimates as to the current "value" of FPH, preferring (as usual) to concentrate on the dynamics of the marketplace.

You can see from the chart that FPH is in a steady longterm uptrend - has been for years. This makes it an excellent stock to "Buy and Hold". The chart shows 3 longterm indicators monitoring this uptrend and any or all of these would provide suitable exit signals when the uptrend ends - as they all do, sooner or later.

Those attempting to trade FPH's secondary trends would currently be out of this stock, having sold at the trendline break. (Red arrows mark Sell signals, green are Buy). Many such traders would be looking to buy back in when/if FPH breaks above the trading range that it has been in for the last couple of months.

Now is not a good time for longterm accumulators of this stock to buy. You can see that the Williams'%R oscillator plotted at the top of the chart is quite high - well above the "Oversold" level that flags the best buying opportunities. Buy signals generated by this oscillator are marked by Blue arrows - you can see that over the years these have without exception identified excellent entry points into FPH. If 6 buy signals in 4 years is too few for you, simply use a shorter time period than the 100 day period plotted here.

[Flying Goat]

Hi,

By this point I assume that the TA team will be jumping ship at FPH? Would welcome any thoughts on that. Actually I have long watched FPH as it has always appeared ridiculously priced, however they are now drifting into a price range where I am strongly considering picking a few up for long term hold. Underlying earnings in same currency is growing at 20%, massive research and development pipeline, number of patents, high margin excellent long term earnings history etc. Yet the dollar is clearly going to kill it over the next year or two, so the short-termism is starting to bite. Surely this stock is a great way to speculate currency, because you are buying one of New Zealand's best companies with a very bright, very long future over the long term? Only thing I don't like is that they seem to be issuing shares every second day! Never the less, the quantities seem almost immaterial.

FG

[FarmerGeorge]

Flying Goat I have been thinking the same thing: great company in a bad situation going cheap. With the dollar potentially going even higher (I'm no economist but I read that interest may rise ergo the currency) I don't think it's a good time to buy just yet. I'll be seriously considering picking some up towards the end of this Reserve Bank tightening cycle.

[Phaedrus]

Flying Goat, you assume that by this point the TA team will be jumping ship at FPH? Nah! How about "By this point I assume that all trend-followers will have been out of FPH for about 2 months".

Take a look at the chart below. The first warning of trouble came when the trading range marked in Blue broke to the downside. [Point (1)] When trading ranges are preceded by an uptrend (as this one was) they should (statistically) break to the upside. This, then was a very clear warning, though on its own probably would not prompt too many people to sell.

Very shortly after the 3 month support level of the trading range was broken, prices broke below the long-term trendline [Point (2)] for the first time in over 4 years. This was no longer a warning, this was a very clear SELL signal. Should anyone have chosen to ignore this too, next to trigger was the moving average. [Point (3)] Again, this had been unbroken for 4 years.

It is hard to see that any user of TA would still be holding FPH at this point, but some people have no system at all other than trailing stops. Such stops were hit at Points (4) and (6). Point(5) marks where the long-term uptrend ended and the current downtrend began. Only staunch fundamentalists would be still holding this stock.

Farmer George, there's nothing wrong with your intent and logic, but why not wait until FPH stops falling before buying? Better yet, why not wait until it starts rising? At the very least, why not wait until the red trendline is broken?

[Lizard]

Oh come on Phaedrus... show some respect. [}]

The first warning of trouble came on some other threads from posters using FA - as you noted in starting this thread. Selling on open the day after this thread was started in response to those posts would have given you $4.32 - and another 8 months to invest it elsewhere. In fact, the peak for FPH occurred just 7 trading days later on 7 June at $4.70. I'm very surprised you're not respectfully asking the FA's for some guidance on where they think the next bottom might be...[][:X]

[Phaedrus]

Liz, My keen appreciation of the fallibility of fundamental "valuations" is the reason I pay so much attention to the market's opinion.
For example, your estimate of FPH's worth as $2.60 would have kept you out of this excellent stock as it continued to rise well over 60% after reaching "valuation". Similarly, any fundamental calculation as to where the bottom ought to be can be expected to be of little relevance to the market reality.