Carabao Group ( $CBG )Carabao Group's valuation and earnings have narrowed compressing its multiple. This is mainly because its stock price went through a euphoric phase which coincided with a global market blow off top in 2020-2021.
The stock price overshot and has been compressing while the company tries to grow into its high multiple. What we have seen is a trend reversal from its high of +- 158 baht
The downtrend and its counter rallies were sold off as profit takers took gains and while many others panic sold who bought at the top, this was done to cut losses, by selling into counter rallies. ( which we can see in its downtrend). We have these peaks and then sharp sell offs.
This has caused downward pressure in the share price and has led to constant sell offs at key resistance areas, meaning people who have been waiting to get out now decide to sell.
This speaks to the dangers of buying a good company, but at overpriced levels. ( at some point valuations matter)
However,
What we are seeing now is a slowing in the momentum of sellers, indicating exhaustion and a potential trend reversal to the upside. The triple bottom at a significant support adds to this.
Carabao now looks to be building a base above 60 baht, and although there is still some selling pressure at 80baht, and we could still see a retest back down to 69 baht, it would be healthy and most likely a good entry point. We could see the stock trading between 80baht-100 baht again by Q1 of 2025.
