I believe that on both a fundamental and technical level, this idea may be worth considering while also taking a market neutral approach. You could think of it as being 'long consumer staples' (or utilities) and 'short consumer discretionary'.
With talk of a 3rd 'covid wave' and murmurings by public officials, there is a risk that we could go into another lock-down, which could restrict movement and prohibit the sale of non-essential items. In that case, the need for communication services *should* increase (as remote activities become reinforced) while clothing stores *could* go shut shop temporarily.
- Recent trading update suggesting strong recovery in Q4 2021, with group t/o growth of 21%.
*Full year DHEPS -75% to -85% EV/EBITDA 4.14x Price/Earnings 19.3x Price/Sales 0.94x
(Source: TradingView)
Performance over 1-Year:
TFG: +107% VOD: 0.50%
Performance over 6-months:
TFG: +22.9% VOD: -0.43%
Technicals:
The ratio price is threatening a channel break while the RSI is signaling a positive divergence. Also note the RSI lower time frames have shifted to a bullish regime. For conservative traders, a break of the channel would be your trigger.
Trade Levels:
Current: 1.07 (Ratio)
Entry Range: 1.06-1.08 Stop-loss: 0.96 Target Range: 1.24-1.28 (close to the 200-day SMA)