Associated British Foods’s share price was heavily penalized and is now in an oversold situation near to a solid support area.
In the recent months, the earnings estimates for the next year are regularly revised upward by analysts.
Technically, the security fell sharply for several weeks. This fall has lead Associated British Foods towards the GBp 2885 support area, which could become useful as a stepping stone for a technical rebound. The target of this bullish trend is the GBp 3168 resistance. Even though, moving averages are still in a bearish trend, the oversold situation could encourage a renewed interest in Associated British Foods.
So as to make the most of a potential technical rebound of the stock, it seems opportune to open a long trade at the current price. A confirmation of this pattern would enable the security to reach the GBp 3168 resistance, with a potential gain of 9%. Investors should not insist under GBp 2885 and are better of placing a stop loss order under this threshold.
Associated British Foods plc is one of the largest European food processing groups. Net sales break down by family of products as follows:
- grocery and bakery products (21.3%): tea (Twinings brand), oils (Mazola and Capullo), spices (Spice Islands and Durkee), jam, bread, biscuits, sauces, etc.;
- sugar (12.9%): Silver Spoon, Billington's brands, etc.;
- ingredients (10.9%): yeasts, flavorings, emulsifiers, sterols, esters, etc.;
- processed food products (10.1%): mainly cereal and animal feed.
The remaining sales (45.6%) are from clothing distribution (408 outlets located mainly in the United Kingdom, Ireland, Spain, Germany, the Netherlands, and Portugal under the Primark and Penneys names).
Net sales are distributed geographically as follows: the United Kingdom (36.8%), Europe and Africa (38.2%), Asia/Pacific (12.7%) and Americas (12.3%).
ASSOCIATED BRITISH FOODS PLC 
