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Two factors that could move the Techtronic Industries Co (HKG:669) share price

7th May '20 by Michael Green

The Techtronic Industries Co (HKG:669) share price is currently trading at 63.8. But given the volatile market conditions and uncertain economic outlook, the question now is what the future holds for it.

To try and predict where the Techtronic Industries Co price will head next, it's worth knowing its strengths and potential weaknesses. The good news is that it stacks up well against some important financial and technical measures...

Specifically, it's a large-cap share with strong exposure to two of the most influential drivers of investment returns in the stock market: high quality and strong momentum.

Quality and momentum are highly prized among investors. Good quality stocks are more likely to be resilient, cash-generating businesses that can compound investment returns over time. Strong momentum in price and earnings is a pointer to stocks with positive trends with the potential to continue.

To understand why quality and momentum are so important in a share like Techtronic Industries Co, here's a close-up view:


Why quality matters...


One of the stand out quality metrics for Techtronic Industries Co is its 5-year Return on Capital Employed, which is a solid 15.7%. Good, double-digit ROCEs are a pointer to companies that can grow very profitably.

...and why momentum is so powerful


This is true at Techtronic Industries Co, where the share price has seen a 42.1% return relative to the market over the past 12 months. Market volatility and economic uncertainty can be a major drag on momentum, but previously strong stocks can be quick to recover when confidence returns.



What does this mean for potential investors?

Finding good quality stocks with strong momentum behind them is a strategy used by some of the world's most successful investors. But be warned: these factors don't guarantee future returns and we've identified some areas of concern with Techtronic Industries Co that you can find out about here.


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