REASONS TO BE BULLISH
WHAT COULD BE BEARISH
SUMMARY
Overall, this seems like one of the biggest no-brainer investments out there. Relatively low-risk, relatively high-reward.
Dividend - Check. ESG - Check. Inflation-proof - Check. Value - Check. New ATH - Check.
Absolutely long-term bullish on SSE, although I expect a a few weeks of sideways action to settle on top of the prior all-time high to call it support. Today SSE is a solid purchase and I expect will remain a good time to begin a position, inspite of the market & political risks identified above. Let's keep an eye on this one in the years ahead. Thanks for reading!
- Technical - Recently broke all-time high from 2007 - 15 yes FIFTEEN years ago!
- Technical - Crossed the 50 MA some weeks back and just reclaimed the top of the purple channel. Holding there at support. A great time to reload.
- Technical - 50, 100 and 200 MAs all the right way around now, after crossing back in October 2020.
- Technical - Back in 2019, we had a double-threshold break. Crossing the 50 MA and entering the RSI bull zone on the same candle - my favourite type of entry. it has already back-tested that move.
- Fundamental - Providing a dividend of 4.6% in a stagflationary environment, SSE is not to be sniffed at. 29 years of consistent dividends too!
- Fundamental - Furthermore, demand from UK households is not receding from here. Same for sustainable energy & ESG investment.
- Fundamental - Price to earnings is reasonable at ~7.6, unlike many other companies on the market.
- Fundamental - SSE's standard mix has 55% renewables, with 40% from natural gas. The average UK provider offers 40% renewable, 38% gas and 16% nuclear. They're one of the best in a bad worldwide bunch.
- Targets - Initial target would be a 200% move to £3,300. Should the energy really be 'cooking on gas', we may see it reach the £5-10k top channel (in green) after the coming 5 years.
- Targets - Any pullback to the 50 EMA is to be bought (~£1,475 and rising).
WHAT COULD BE BEARISH
- Fundamental - Sold off on news of a potential windfall tax on oil & gas producers. As of today, I would rate the chances of that passing or affecting SSE as unlikely, despite the political pressure. Even if implemented, it is perhaps more likely to stunt BP and Shell's progress than a "greener" company like SSE.
- Fundamental - Businesses like SSE are needed to support households and also shift to a greener future - being one of the biggest investors in green energy in the country. Unless those in charge wish to undo all their promises in recent years, I'd rate the chances of this impacting SSE as low.
- Technical - Down nearly 8% for the day and with other more risky assets selling-off, SSE may still stutter (even if downside limited from here).
- Technical - Stop loss would be £1,285 which would create a new low and a 27% decline
SUMMARY
Overall, this seems like one of the biggest no-brainer investments out there. Relatively low-risk, relatively high-reward.
Dividend - Check. ESG - Check. Inflation-proof - Check. Value - Check. New ATH - Check.
Absolutely long-term bullish on SSE, although I expect a a few weeks of sideways action to settle on top of the prior all-time high to call it support. Today SSE is a solid purchase and I expect will remain a good time to begin a position, inspite of the market & political risks identified above. Let's keep an eye on this one in the years ahead. Thanks for reading!