SPD.L at Oct 16, 2015
JD.L at Oct 16, 2015
As a hedge against this, the competitor, JD.L look exhausted. It has been continually overbought all summer (yellow box, that in itself is interesting), but since the last sharp rise above 800p, has developed a strong negative RSI divergence, but yet is nowhere near oversold. If we look at the fundamental performance of the two companies (below), another disparity rears it’s head.
Although SPD.L makes a profit of 8.5% it only trades at a P/E of 16.5, whereas JD.L, with 5.2% margin, trades at a P/E of 23.4. So JD.L is 'more expensive'.
Other points are that the SPD.L EPS is higher, despite a lower nominal share price, and a quick glance at the net income chart (the left hand bottom bar chart) shows that SPD.L is growing, whereas JD.L is more static.
All this leads me to recommend buying SPD.L here, with a target above the previous high of 820p, eventually leading to the March 2014 all time high of 924p. You may also consider a hedge (perhaps only 50%) in the form of a short on JD.L shares, maybe back to the 887p pivot from August 27th.