QinetiQ was sold off by the last Labour Government in 2006 and for some time it looked like those who bought into the IPO had been sold a turkey. It came to the market at 200p a share and after an initial rise in price it has spent most of the last 6 years underwater. It is still underwater, but at 196p it is now standing in the shallow end of the pool and long term investors who bought in at the IPO might just be about to see a paper profit.
Of course, in the seven years since it came to market there have been ups and downs, but mostly down for those that bought at the wrong time, like at the IPO. However, since it dipped under a pound back in August 2011, it has been on a steady almost relentless upward rise, just about doubling in price. This has also happened against the backdrop of uncertainty in defense contract procurement going forward. According to the latest QinetiQ trading update, nothing much has changed regarding this uncertainty.
Trading Environment and outlookhttp://www.digitallook.com/news/rns/20380573-38318/QQ_-Trading_Statement_html
The degree of political and economic uncertainty in both our major markets means that forward visibility for the next six months is much lower than usual, particularly in the US. However, the strong performance in the first half gives the Board confidence that the Group should at least meet its expectations for the current year, absent any material change in customer requirements. The Board's view of the outlook beyond the current year remains unchanged.
So why so bullish?
QinetiQ has more or less lived up to market expectations in the last year or so and recently there have been bids and proposed mergers in its sector, but it hardly looks like a screaming buy on fundamentals. However, when sentiment is with you in the market, it can take the share price a long way. If you are a long term buy and hold investor or longer term trader, the long term charts don't tend to lie when it comes to momentum, up or down.
QinetiQ has more or less lived up to market expectations in the last year or so and recently there have been bids and proposed mergers in its sector, but it hardly looks like a screaming buy on fundamentals. However, when sentiment is with you in the market, it can take the share price a long way. If you are a long term buy and hold investor or longer term trader, the long term charts don't tend to lie when it comes to momentum, up or down.
The key is finding a system to trade them and having the patience of a saint waiting for the set up. Then you need the psychological makeup to actually take the trade. Would QinetiQ's public sector defense procurement profile have put you off buying into this trend? Some companies that rely heavily on public sector contracts have crashed in recent years on the very threat of reduced contracts going forward, QinetiQ has at least for now, defied that trend. QinetiQ is a good example of the trend being your friend, even if the fundamentals and newsflow doesn't always seem to justify it.
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