Mo-BRUK S.A. is the leader in industrial waste processing in Poland. The company re-IPOed in late-2020 and became a part of the country’s WIG 40 index in March, 2022. Management is currently investing to increase capacity by roughly 70% by 2024, further strengthening its competitive position. Mo-BRUK ‘s pristine balance sheet gives it the flexibility needed to undertake such otherwise risky bets.
A decrease in “eco bombs” processing – treatment of illegal waste dumps across Poland – is expected to have led to Mo-BRUK’s first annual sales decline in years in 2022. The fundamentals of the core business, however, remain strong thanks to the increase in waste volumes and treatment rates. Тhe EU’s and Poland’s waste processing policies also create a major tailwind for the company going forward. It seems only a matter of time before growth resumes.
The stock, on the other hand, has gone basically nowhere for the past two years. Currently at ~280 Polish zloty, the share price trades at the same level it did in January, 2021. Mo-BRUK has been a good example of a fundamentally strong company trading at a cheap valuation, whose stock still doesn’t budge. We think that’s about to change soon, though.
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The daily chart of Mo-BRUK reveals a sharp rally from the December, 2020, bottom, marked as wave (1). It is followed by what appears to be a W-X-Y corrective combination in wave (2). Wave W is a simple a-b-c zigzag and so is wave X with the difference that wave ‘b’ of X is a triangle. Wave Y is also a triangle correction, labeled a-b-c-d-e.
Once a correction is over, the preceding trend resumes. If this Elliott Wave count is correct, wave (3) should eventually lift Mo-BRUK stock to a new all-time high. This setup can be relied on as long as the low of wave ‘c’ of Y of (2) at PLN 272 holds.
The planned capacity increase implies that management believes the company’s profits can at least double. Add a little multiple expansion and the stock can realistically triple from its current level over the next several years. It looks like charts and fundamentals have finally aligned in Mo-BRUK ‘s favor. That is why it is part of The EWM Interactive Stock Portfolio, along with 18 other companies.
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