Boats and guns – what red-blooded trader could turn down Austal (ASB)? Despite reporting yesterday a (well-flagged) loss for 2016 its shares rose by almost 13%. Either traders took a “boys and their toys” approach, or investors are convinced that the US production misses were just a hiccough.

Indeed outside the US operations are ticking along. Given the missteps occurred on the first of a number of US combat ships, there may well be a return to profitability in 2017. Although Austal also deals with the private sector (ferries) its connection to Australian and US government spend mean it could be viewed as a more assured earner.

The chart is painting a more positive picture. After sliding to lows, then trading sideways, yesterday’s move looks like a break out, and possibly the start of a new uptrend. Traders may target the 2016 high at $1.66, although investors may look for a point nearer the 2015 high at $2.56.


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