SWM does have a higher level of debt than Nine but also does have higher earnings. End of the day though I think the future of these two stocks are intertwined and to use TA in isolation to state one as a dog whereas be bullish on the other is a somewhat simplistic approach. Indeed NEC is shorted at 5x the rate of SWM (source - shortman), so the so called smart money wouldn't agree with your thesis. Furthermore, if you look back at NEC one year ago they were also tracking at multi-year SP lows and no doubt would have had experts warning of impending doom. Instead the stock returned circa 50% over the year.
SWM have their job ahead of them to see a bounce. They need to cut costs in areas of decline whilst maintaining their relative strength in sport, news and light entertainment. More importantly perhaps they also need to create a believable vision for the future so that the market believes that there is a sustainable business model.
SWM Price at posting:
55.5¢ Sentiment: Buy Disclosure: Held
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