GKN' stock has been sharply performing since April. However, after being stopped by the GBp 312 area, prices are coming back to an opportune buying point.

From a fundamental viewpoint we note, firstly, the low valuation of the stock. Indeed, the share is undervalued compared to its peers, with a PER estimated at 13.3x for 2013 and 10.8x for 2014. Furthermore, the "EV/Sales" ratio for 2013 is estimated at 0.8x against 1.05x for its peers. Moreover, sales are expected to rise by more than 25% between 2012 and 2015.

Graphically, the trend is bullish in the medium and long term. Nonetheless, the stock is now coming back to its 20-day moving average, around GBp 290, which may help prices to resume their uptrend. Thus, we expect a comeback to GBp 290 before the security uses its moving average as a stepping stone to bounce towards GBp 312.

As a consequence, it seems opportune to take a long position once prices are back to GBp 290. The main target will be GBp 312. A stop loss must be placed below the GBp 285 short term support in order to avoid any downtrend.