Shine Justice (ASX: SHJ) is a bargain at $1.30

Marc Kennis Marc Kennis, January 18, 2022

Shine through a technical analysis lens

Shine Justice Ltd (ASX: SHJ) provides legal and insurance recovery consulting services in Australia and New Zealand. The company operates through 56 branches and has two segments, Personal Injury and New Practice Areas. Technical analysts believe that nothing can tell the story of a stock better than its share price chart. So, let’s have a look at the chart of Shine Justice and see what happened in the last two years.

 

Shine Justice

Shine Justice, Daily Chart in Semi-log Scale (Source: Metastock)

 

❶ After a market-wide recovery from the pandemic lows, shares of Shine Justice started to slip due to fears courts would shut down and the impact of that on Shine’s business.

❷ Shine Justice announces its financial year 2020 annual results and shows its business resilience despite the pandemic wreaking havoc. The company reports growth in both revenues and profits and decides to keep paying dividends (4.6% at the current share price level of $1.30), evidence of confidence in the future performance of the company.

❸ The blue horizontal line shows the pre-pandemic all time high price level. The share price makes a strong breakout on the back of a strong financial year 2021 results and a positive outlook by management.

Overall, the primary uptrend in the share price confirms the successful story of Shine Justice and one of an expanding business, as shown in its financial results.

 

The stock needs to consolidate at current levels before it can head higher

Technically speaking, trendlines with slopes of around 30 degrees are generally stable and reliable. As such, divergences from these trendline are expected to be unstable and correct themselves towards the trendline. This can happen by price corrections or time corrections. A time correction is likely to be the case for Shine Justice. In technical analysis a “time correction” means the stock will trade in the current price range in the near term until it reaches the trendline, which is expected late March.

 

Can Shine Justice shine again? 

Using the Fibonacci retracement levels shown in the chart, the range that Shine’s shares are expected to trade in is approximately $1.30 to $1.50.

The trendline itself then can be used as a stoploss level. This is because a break of the trendline at the very minimum signals a pause in the growth of the business. On this basis, entries at or near the trendline are the best as they provide the highest risk-reward ratios. 

Additionally, the current EV/EBITDA multiple for FY23, which starts in five months, is only 4x. Not bad for a stock expected to grow its EBITDA by 7% next year.

 
$1.30 seems a good price to get in

If you’re suffering from FOMO, buying at the bottom of the trading range right now, i.e. around $1.30, can still make sense. Just be sure to put in a stop-loss that coincides with the rising trend line and manage it actively.

 

 

Stay up-to-date on ASX-listed stocks!

 

Make sure you subscribe to Stocks Down Under today

 

GET A 30-DAY FREE TRIAL

 

No credit card needed and the trial expires automatically.

 

 

Frequently Asked Questions about Shine Justice

Blog Categories

Get Our Top 5 ASX Stocks for FY25

Recent Posts

budget blowout

How will stocks be affected by the so-called ‘budget blowout’? Its more complicated than you think

The term budget blowout has gone viral in the last week. It is not a new term, but it is…

Boss Energy

Boss Energy (ASX:BOE): Its Honeymoon Uranium Project is back in production! So why have shares had a bad 2024?

Boss Energy’s (ASX:BOE) South Australian project may be called Honeymoon, but it has been anything but that for investors.  …

Resouro Strategic Metals (ASX: RAU)

Resouro Strategic Metals (ASX:RAU): What other ASX rare earths developer has a 1.7 billion tonne deposit?

To say Resouro Strategic Metals (ASX:RAU) has got a monster of a rare earths deposit is an understatement. Resouro just…