Stock market resistance is one of the key pieces in technical analysis and if you know how to operate with this price level you can achieve your goals. You can develop this investment strategy at this time with the textile company Inditex as it is very close to its first and closest resistance. Being a large company that has the approval of the main equity market analysts who have chosen to recommend it for next year.
To this must be added the fact that Zara's sales, which also includes Zara Home, rose by 7,2% in the first half of its fiscal year 2019-2020 (from February 1 to July 31 ), up to 8.895 million euros, according to the information sent by the company to the National Securities Market Commission (CNMV). Inditex's flagship continues to be the brand with the highest turnover in the group. This is very positive news for small and medium investors who hope to take positions in the value for the next few years.
While on the other hand, we must not forget that this listed company is one of the most stable companies that are included in the selective index of Spanish equities, the Ibex 35. In this sense, it is the second with the highest capitalization, by above large financial groups, such as Santander or BBVA. Although it is true that its profitability in recent years has not been as in the past. But at any time it can resume its upward path to make it one of the most profitable companies in Spanish equities.
Inditex trades at 28 euros
At the moment, the valuation of the shares of the textile company is slightly above 28 euros per share. I mean, still something far from all-time highs in which it was very close to 40 euros several years ago. After correcting its rises, it has arrived in this scenario and whose first objective is to exceed the strong support it has at 30 euros. To overcome it with a higher volume of recruitment, it could be considered to achieve much more demanding quotation levels. But what is truly important is that the upward trend has resumed in the medium and long term.
On the other hand, it seems to have formed a ground figure at 25 euros and as long as this level is not violated, the value can be guaranteed. Although everything seems to indicate that in the next twelve months it may become one of the most profitable bets of the selective index of Spanish equities, the Ibex 35. To the point that its technical analysis at this time offers us all the guarantees on its upcoming developments in equity markets. With the real possibility of approaching the levels that have between 33 and 35 euros per share. In any of the cases, you can obtain large capital gains in your operations from now on.
Weak dividend yield
While on the contrary, one of its weakest points is the profitability it offers its shareholders for the dividend accrued every year. In this sense, it is one of the lowest in the selective index of Spanish equities, the Ibex 35. With an average and annual interest around 3,5% and below the blue chips of the Spanish stock market. On the other hand, it should also be noted that Inditex shares are trading with less volatility between their maximum and minimum prices and this is a factor of greater tranquility for small and medium investors.
Not surprisingly, we are talking about one of the companies in the world with a more consolidated line of business and which is present in almost all the major capitals of the world. And that in recent years has strengthened its online division to make the business more profitable with a substantial rise in profits every quarter. Although not surprising in its results, as it happened 5 or 8 years ago, where it had a long-lasting bullish rally that allowed its shareholders to make the most of their savings, when they reached a price of very close to 40 euros.
Strategies to operate with the textile
A system for not making mistakes in the next decision we are going to make is based on waiting for it to exceed the levels it has in the $30 with the aim of taking positions in the stock in a more aggressive way than before. With the goal of earning in the operation a few euros in the operation and with a period of permanence directed to the medium and long. Because in effect, Inditex is not a security to carry out speculative operations. Not much less. If not, on the contrary, it requires longer terms so that its movements in the equity markets can be profitable.
While on the other hand, if for any circumstance, it went below 25 euros per share, there would be no choice but to undo positions because there would be a very strong selling pressure that could seriously depreciate its valuation on the stock market. Despite its consolidation in the line of business that it is carrying out. Not surprisingly, there would already be an opportunity to buy their shares from much tighter prices and with a more important revaluation potential than at this very moment. In any of the cases, it is not one of the securities that present the most risks in operations by retailers.
Analyst Recommended Value
One of Inditex's strengths is that it is mostly recommended by a large number of financial analysts for next year's investment portfolio. After having been neutral for a long time and with many doubts as to the strategy to use in the coming years. From this point of view, it is a value that must necessarily be on the radar to take positions clearly and in some cases Very aggressive. On the other hand, we cannot forget at this time that this is a company that is governed by the criteria of consumption, with all that that indicates, for both good and bad.
From this general perspective, we do not see excessive risks if you are going to open positions from now on. Except for a change in trend in indices around the world. In this sense, its main enemy to revalue in the financial markets is that in the end there is a sharp fall in the international stock markets. To the point that it would also be affected by these stock movements, with one intensity or another. Despite its excellent stability shown in recent months, with an annual appreciation of around 6%.
International expansion
Another aspect that must be valued at Inditex is that it is the few securities in the textile and fashion sector that are listed on the national continuous market. In Spain it has hardly any competition and this is another factor that works in its favor. By concentrating the investment intentions of small and medium investors.
Although on the contrary, has no references to measure the trend of the sector in Spanish equities. As with other business segments, such as banks, electricity companies, construction companies or telecommunications companies. They have more representatives that allow greater diversification in investment at any time and situation. Despite the fact that this is a company that has expanded very quickly in all countries and has given it greater visibility among investment funds.
Sales grow by 7%
The Inditex Group's sales in the first half of 2019 –between February 1 and July 31– have increased by 7%, reaching 12.820 million euros for the first time. At constant exchange rates, the turnover grew by 7%. Sales in comparable stores, meanwhile, once again maintained their firm growth rate and increased by 5%, with positive increases in all formats and in all geographic areas, and both in-store and online.
In this sense, the president of Inditex, Pablo Island, has highlighted "the strong operating performance that these figures imply ”and has underlined“ the importance of investments made, both in store and in logistics and technology, which are a key element in the development of our integrated platform of stores and online to the service of the client ”. With very positive prospects for the coming years and that can be the object of operations by small and medium investors to develop their new investment portfolios for the next few years. Being it is a company that has expanded very quickly in all countries.