Will Babcock continue falling, or will it rise again back to 548p recent highs?

• Babcock shares have fallen over 10% in the past 3 weeks.
• Shares were -13% since mid-December, but bounced over +2.7% from the lows.
• Currently trades 483p (at the time of trading).
• Shares almost -4.25% from 2019 highs; +1% from 2019 lows; +1.25% year-to-date.
• Defense sector has been struggling after FT reported that the UK government is facing a funding gap for its nuclear submarine building programme (Source: FT)
• Babcock is one of the contractors on the programme, alongside BAE Systems and Rolls-Royce.
• Source: Dow Jones, Bloomberg, FT, Company News, AlphaTerminal

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Trading Babcock – An Example

Let’s say you feel that the stock is a bargain and you think it could bounce back to December high of 548p. You decide to buy exposure to £10,000 worth of Babcock  using a CFD, at the current price of 483p. To do this, you need £2,000.

Let’s assume Babcock recovers back to 548p (+13.4%). Your profit would be £1340, 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. Babcock 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.