What is Happening to the Lend Lease Share Price?

What Does Lend Lease Do?

Lend Lease [ASX:LLC] is a diversified property development company. It designs, builds, funds and owns a range of property and infrastructure developments, both in Australia and overseas. More importantly, it owns one of the largest residential land banks in Australia. It develops this land when demand is strong, and thus benefits from an upswing in the housing cycle. It is also a major development of residential apartments.

What’s Happening to the Lend Lease Share Price?

Since the start of the year, the Lend Lease share price has been weak, falling from $14.40 to around $12. That’s a 17% fall in just over a month. You can see this share price weakness in the chart below.

Lend Lease Share Price

Source: bigcharts

It is always worth looking at a share price chart before you invest. It tells you a lot. In this case, the Lend Lease share price has been in a downtrend since the middle of 2015.

The November/December 2015 rally wasn’t enough to end the downtrend, and it’s reasserting itself in 2016. That’s reason enough to avoid the stock for now.

What Now for LLC?

The share price action is telling you to watch out for some bad news. LLC carries risk on its apartment construction. There is increasing concern that many buyers who put down a deposit on a new apartment last year won’t want to, or won’t be able to settle when the time comes. This could leave LLC exposed.

LLC trades on a P/E ratio of just 10 times 2016 earnings estimates. Some consider it cheap but the price action tells you to be wary of a profit downgrade, or weaker than expected future earnings.

Never assess a stock’s fundamentals without looking at the chart too. Combining fundamental analysis with charting can yield powerful results.

If you’d like to know more, click here.

Greg Canavan

Editor, Markets and Money

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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

 


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