The STAR most probably will shine again.

This counter Star (stock code 6084) is currently very weak. Will it shine again? Chances are good a profit will be made if we were to buy at RM 2.60 level.( My personal opinion only)

§  From a 3-month high of RM3.26 (19 sep), STAR tumbled 21% to a low of RM2.58 (24 Dec).

§  Values are likely to resurface after recent plunge and we see limited scope for further significant selldown due to its extremely oversold positions (daily RSI at 6.6 and slow stochastic at 1.8), defensiveness, strong netcash of RM230m as at 3Q12 (or 31sen/share) and attractive net dividends (6.9%). Valuation remains undemanding at 10.7x FTY13 P/E, implying a 11.5% discount to its 5-year average of 12.1x.

§  Immediate supports are RM2.54 (daily lower Bollinger band) and RM2.46 (23.6% FR). Lower supports are RM2.30-2.35. Risk takers may start to nibble as a relief rally in the pipeline with initial upside targets at RM2.72 (100-d SMA) and RM2.83 (20-d SMA). More formidable resistances are RM2.90 (50% FR) and RM3.05 (61.8% FR). Cut loss below RM2.43.

As Warren Buffett once said, be brave when you see blood in the street. There is no blood in the street yet but this particular counter (Star) has blood all over its price. So maybe it is good to buy some at around RM2.60 and sell when there is resonable profit to be made.