Hot Stock To Buy Today: This Chemical Stock Can Give 30% Return In Short Term
SRF Limited is a holding company engaged in the manufacturing of chemicals and polymers, technical textiles and packaging films.
Chartmojo by Stockwits, a fast-emerging team of technical analysts with specialisation in breakout trading, has bet on SRF.
Their logic is very simple. After forming the base pattern, it has given a decisive breakout with strong volume. Since it has broken ATH with strong volume, the probability of going up is quite high. Also, the momentum in the chemical sector is high and the stock is also making a series of higher highs and lower lows after the pandemic. This is classic example of ATH Breakout Trading strategy. See the chart below:
Their first target is 2895 and if it crosses this level, it may go up to 3472. The RSI on daily chart is 71 which shows a strong momentum also. The stop loss is 2288 INR.
What You Should Do?
However, the valuation is not very encouraging as the Intrinsic value of the stock is less than the current market price, as per the Ticker Tape screener.
Also, considering the fundamentals of the company and growth rate, it’s maximum upside is 3023 INR which is 15 per cent above the current price.
Therefore, the probability of touching the second target of 3474 seems difficult, if not impossible. The company is fundamentally sound and doesn’t have any red flags. Therefore, you can buy in small quantity and may book profit after it achieves the first target.