trader insight

GT Financial have recently focussed on AMP as being one of the best recovery stories in recent times.

Management at AMP has put in the necessary procedures to turn around the business to where it stands today and GT Financial feel that at current levels it provides value for further upside.

AMP is now positioned to generate a more secure stream of earnings with much less risk to shareholders than in the past, even in periods of market weakness. Moreover, the new changes to superannuation rules, and recent budget announcements regarding the 'future fund' and superannuation surcharges, all play into the hands of AMP. Overall, AMP expect the underlying return on equity to rise strongly to well above 20 per cent in 2005 and to rise further in 2006. GT Financial’s technical outlook for AMP is also encouraging. With the stock undergoing a market correction in recent times, AMP has seen buying support to around $6.50. A small base formation is currently underway and once resistance across $6.97 is cleared, a more aggressive appreciation can be looked for to at least retrace some of its lost ground.

Indicators are supporting this turnaround giving confidence of an eventual turnaround. Focus will then turn to $7.50 initially with a low risk that levels back under $6.55 will be registered.