Why GUD is my next buy recommendation

An impressive aspect of GUD has been the extent to which the combined earnings (EBIT) contribution from the Sunbeam and Dexion divisions has been improving as a result of business improvement programs. A JV with Jarden allows Sunbeam Australia to expand its reach outside of Australia and NZ and into the higher growth Asian markets. With GUD now trading down on a P/E of 11.2x, the market is taking a view that achieving profit growth without the benefit of the recent cost cutting initiatives, and achieving sales growth against further falls in the $A/$US is going to be difficult. Accordingly, with GUD having executed well on profit improvement initiatives to date, the key question for investors is whether the Company can generate profit improvement on the back of revenue improvement over the short-to-medium term at least. In terms of the technical aspects, the chart is now showing a strong bounce from support with buy signals being triggered on the RSI and MACD. We anticipate a rally from here with resistance coming in near $8.20 and then further up near $9.