Dicker Data up 28%: Is it Time to Buy?

Dale Gillham, Chief Analyst and Head Trainer of Wealth Within

By Dale Gillham |

If you’ve bought a new PC or other computer gear from a local retailer, chances are it got to you via Dicker Data. Branding itself as Australia’s most trusted IT distributor, Dicker Data has skyrocketed since the low of 26 July as its share price is up 28 per cent with more to come.

The stellar growth of Dicker Data

The stellar growth of Dicker Data is positive as it has managed to offset losses from other declining segments by diversifying its products and services. This has protected the company somewhat from market volatility as they now offer everything from software integration, project and server management, and networking among other services. Looking at the numbers, the company has recently reported its half-year earnings are up 15.40 per cent while net profit after tax is up 9.40 per cent compared to last year’s half-year results.

There is no question that as a society we are not only reliant on technology but it also plays a big part in our everyday lives. Dicker Data recognises this and has been actively expanding its business with the recent acquisition of Hills Security and IT and Connect Security Products Ltd in New Zealand. No longer is it considered just a supplier of computers or new hard drives, it’s more diverse than that.

The technology sector has been the most bullish in the Australian market this year and until recently Dicker Data has lagged behind the sector. But I now believe they have the foundations for the next stage of growth and will outperform the market moving forward.

That said, the share price has hit key resistance at around $10 and is showing short-term weakness. While I don’t believe the resistance is significant, you need to be mindful that the market and stocks themselves have been subject to unpredictable volatility. While only time will tell what direction Dicker Data will take, I believe this is a stock to put on your watch list as an opportunity to take advantage of in the not-too-distant future.

What were the best and worst-performing sectors last week?

The best-performing sectors included Utilities down 0.1 per cent followed by Consumer Staples down 1.53 per cent and Consumer Discretionary down 1.93 per cent. The worst-performing sectors included Information Technology down 4.78 per cent followed by Healthcare down 4.48 per cent and Real Estate down 4.44 per cent.

The best-performing stocks in the ASX top 100 included Newcrest Mining up 2.84 per cent followed by Origin Energy up 2.55 per cent and Fisher and Paykel up 2.38 per cent. The worst-performing stocks included Block down 14.75 per cent followed by IDP Education down 10.67 per cent and Lynas Rare Earths down 7.96 per cent.

What's next for the Australian stock market?

The roller coaster ride in our market is continuing as the All Ordinaries Index has once again reversed direction compared to the week prior. Since the end of July, the Australian stock market has almost been a story of one week up and one week down. That said, the bears have been more aggressive during at least two of those weeks, one of which was last week with the market down nearly 3 per cent.

Given what has transpired in recent months, we may see this type of volatility in the market continue over the short term, which means we can expect further falls. Despite trying to be more positive in the bullish weeks, I have continued to warn investors that we needed to be prepared for a fall down to around the 7,000-point support level. This now looks more certain, and I believe this will occur soon after which we will experience a sustained bull run.

That said, as I continue to say anything is possible in these current conditions, which was evident last Friday when the All Ordinaries Index fell 110 points to a low of 7,156 points before reversing to close high for the day. Given this, there is a possibility that last Friday was the end of the down move although only time will tell. Until we confirm the market has stopped falling, I recommend investors be patient, have an exit strategy and make sure you place a stop loss on all of the stocks you own.

For now good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.

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