Will Serco continue falling, or will it rise again back to recent 104p October highs?

• Serco shares have fallen close to 7% in the past week to trade 92.7p (at time of writing).
• Shares -10.25% from 2018 highs; +17% from 2018 lows; -6.3% year-to-date.
• Recent share price range: Oct lows 87.5p; Oct highs 104p.
• Shares have fallen on the expectations of changes to public spending in UK’s Autumn budget.
• The outsourcing group’s shares are suffering from the budget uncertainty regarding Brexit.
• Serco has also been downgraded by brokerage Stifel (29 Oct) to Sell, with the target price lowered to 85p.
• Can the stock regain recent highs?
• Source: Dow Jones, Bloomberg, FT, Company News

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Trading Serco – An Example

Let’s say you feel that the stock is a bargain and you think it could bounce back to recent highs of 104p. You decide to buy exposure to £10,000 worth of Serco using a CFD, at the current price of 92.7p. To do this, you need £2,000.

Let’s assume Serco recovers back to 104p (+12.2%). Your profit would be £1220, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 4% from the current price. Serco falls 4% and hits your stop-loss. Your loss would be £400.

This is provided for information purposes only. It should not be taken as a recommendation.