2 Stocks under Investors’ Radar- ZEL, ARR

Z Energy Limited (ASX: ZEL)

ZEL was listed on ASX in 2020 and it is an Australian company involved in providing fuel to retail and commercial customers. The company has subsidiaries Harbour City Property Investments Limited, Z Energy ESPP Trustee Limited and Z Energy LTI Trustee Limited. Its market capitalization stood at AUD 1.77 billion as of 28^th February 2022.

Operational Updates & 3QFY22 Financial:

• On 28^th February 2022, Morgan Stanley International Holdings Inc. and its subsidiaries have become a substantial shareholder of ~5.563% and on 4^th February 2022, Accident Compensation Corporation (ACC) ceased to be a substantial shareholder in the company.
• As per 20^th January 2022 quarter report, the company re-affirmed its FY22 RC EBITDAF guidance of ~$270 - ~310 million. Its CR store sales were up by ~2.2% for its 3QFY22 as compared to FY21 with margins up by ~1.4% in PcP.
• As per the quarterly report, ZEL’s average weekly store sales were reported as ~44.05k and its convenience store revenue was written as ~$107.9 million margin, along with ~$28.4 million convenience store margin.
• It is all set to move exclusively to refined fuel imports from 1^st April 2022, and the contribution expected from these contracts will be ~$45-$55 million increment in its EBITDAF.

Technical Analysis: On the weekly chart, ZEL prices are sustaining below the horizontal trend line resistance zone and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) trading at ~60.20, and formed a negative divergence, which might indicate the possibility of a correction from the higher levels. However, the prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a support zone. An important support level for the stock, is placed at AUD 3.15 while the key resistance level is placed at AUD 3.62.

After considering the company’s current technical levels and negative divergence, investing in this stock at current levels must be considered with a careful approach, hence it's suggested to ‘Watch’ and re-evaluate the stock once the prices approach the support & resistance levels. The stock was analyzed as per the closing price of AUD 3.400 per share, down by ~0.294%, as of 28^th February 2022.

Weekly Technical Chart – ZEL

Source: REFINITIV

American Rare Earths Limited (ASX: ARR)

ARR is an exploration company and was listed on ASX on 17^th February 2011. It focuses on the development of La Paz Scandium and Rare Earth Project in Arizona that. As of 28^th February 2022, the company’s market capitalisation stood at AUD 146.33 million.

Latest News & 2QFY22 Financials:

• As per its 14^th February 2022, the company announced its partnerships through its U.S. subsidiary – Western Rare Earths (WRE) with Lawrence Livermore National Laboratory (LLNL), Penn State (PSU) and University of Arizona (UA).
• On 8^th February 2022, Mr. Richard Hudson was appointed as Non-Executive Director.
• As per its 2QFY22 Quarterly Report released on 21^st January 2022, its La Paz project got drill permits and was expected to start in early February 2022, whereas drilling at Halleck Creek Project will commence in 1QFY22.
• With nil cash receipts from customers, the company reported a negative ~AUD 392k as its net cash outflow from operating activities. The company closed its second quarter (2QFY22) ending on 31^st December 2021 with a cash balance of ~AUD 8.166 million versus ~AUD 2.94 million posted in last quarter.

Technical Analysis: On the daily chart, ARR prices are trading below an upward sloping trend line resistance zone and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) trading at ~49.880, indicating bearish momentum. The prices are trading below the trend-following indicator 21-period SMA, which may act as a resistance level. An important support level for the stock, is placed at AUD 0.32 while the key resistance level is placed at AUD 0.40.

Considering the stock’s volatility and current technical levels, investing in this stock at current levels must be considered with a careful approach, hence it's suggested to ‘Watch’ and re-evaluate the stock once the prices approach the support & resistance levels. The stock was analyzed as per the closing price of AUD 0.355 per share, down by ~4.055%, as of 28^th February 2022.

Daily Technical Chart – ARR

Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Yellow colour line reflects the Trendline, which shows whether the direction of the scrip is upwards or downwards.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.