Auto Trader (AUTO): Motoring Ahead
I have to admit it took me seconds to arrive at the title for the latest analysis on Auto Trader, with “Motoring Ahead” being appropriate not only to the technical position, but also the fundamentals. This is said in the aftermath of today’s full-year results where profit after tax jumped to £126.7m from just £10.4m last time. Such a jump in performance is always noteworthy, even if special factors have led to it. However, the main point as far as Auto Trader is concerned is that the car buy/sell portal is the number 1 in the UK, and can therefore be regarded in the same way as Rightmove (RMV) and Zoopla (ZPLA) in terms of having a stranglehold in its space. Indeed, one would suggest that the first mover advantage here is so great that it would be extremely hard for a new entrant to get into its space without being backed by a lot of cash.
As far as the charting picture is concerned on the daily timeframe, it can be seen how there has been a rising trend channel in place since as long ago as December. For the past couple of weeks we have a U shaped bull flag resting above the 50 day moving average at 385p. While this feature remains in place on an end of day close basis the upside is regarded as being the top of last year’s trend channel as high as 500p over the next 1-2 months.
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