NCC Group: A potential bottom-fishing situation?

It should be the case that cyber security is a no-brainer area of growth given that hacking and cyber fraud are on the rise. However, it would appear that many are happy to leave their cyber guard down.

I have to admit, the immediate aftermath of any profits warning gives me the instinct to run a mile. As the old stock market adage goes, such warnings are like London buses, which have a tendency to arrive in threes.

In the case of NCC Group (LON:NCC), today’s profits warning regarding the core IT assurance division is not one which would fill the hearts of its fans with joy. However, there are profits warnings and there are disasters, and this is nowhere near the latter. Forward orders are up, revenues are up 35% and group adjusted EBITDA is also heading in the right direction.


Perhaps just as importantly, it can be seen from the daily chart how the stock had already halved from the beginning of October. If you factor in the fact that today has delivered a hammer candle on the daily chart – indicative of a bear trap – one might consider this a bottom fishing situation.

As little as an end of day close above the 10 day moving average at 194p could be enough to target the 50 day moving average at 230p over the following month.