COVID packaging

Market analyst Regina Meani discusses Amcor (ASX:AMC).

In a COVID world one of our main focuses has been food, specifically how we receive it. Amcor Plc (ASX:AMC $16.67) headquartered in Switzerland, develops and produces flexible packaging, rigid containers, specialty cartons, closures and services for food, beverage, pharmaceutical, medical-devices, home and personal-care, and pet care and technical devices.

An Australian-American company it has 230 sites in over 40 countries with 47,000 employees and sales of US$12.5 billion. Throughout its share price history, we find that the price moves strongly to a level where it becomes overbought and then pulls back and moves sideways for a period of time. The most prominent of these events occurred between 1994 and 2012 and if looked at in isolation one could believe that the extent of the phase was the entire expected movement for the stock. The phase incorporated large swings in price.

Early in 2013 the price leapt away from this phase and surged higher to move up from the breakaway point around $8.50 to reach $16.66 in May 2016. In doing so the price moved into overbought conditions again and another sideways phase ensued. For much of the time since then the price has oscillated between $12.60 and $16.80 with a March 2020 plunge to $9.87 producing a spike low with the price rapidly returning to its previous churning range.


 

In August the price broke away from the phase and surged to $17.90 on 23 August. Some aspects of the move appear premature with the price pulling back to support in the $16.50-80 range, and traders should be wary that it may have been a bull trap. A price drop below $16.37 would indicate further risk back towards $15.50-16.00. The action would return the stock to its previous sideways parameters and suggest more swings in price. To change this scenario, a stronger and sustainable price recovery through the upper limits of the phase through $16.80 would find resistance around $17.20 and then at the recent high at $17.90.

Once the new path is established the price would gain the potential towards $19.50-$22.00 and higher to $28 and possibly beyond.


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