Author: Kenley Scott

Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

Technical Setup

Deepak Fertilisers & Petrochem (DFP.IN, $2B market cap; $7M ADV)

 

TECHNICALS

  • The stock broke out of a stage-one 24-week consolidation base and made a new 52-week high on more than 2x the average volume. Immediate support is near its 10-DMA (-8%), followed by its 21-DMA (-11%).
  • Strong fundamental ratings: EPS Rank 88. SMR Rating of B. High Composite Rating of 97.
  • Strong technical profile: The stock has been under accumulation for the past two months, indicating healthy money inflow. Up/Down Volume ratio of 1.3 indicates positive demand for stock. RS line is at an all-time high, with a strong RS Rating of 95.

Institutional sponsorships has increased to 112 funds (+23% y/y) as of March 2025

Strategy View

Posted on by Kenley Scott

Key Points:

  • Updated a note from early-February 2025, which looked at sharp initial drops from highs in AI infrastructure stocks, and related to prior cases of quick/sharp drops from highs.
  • The initial guess was that the drop would at a minimum cause a 3–4 month base in the stocks, in the successful cases. The longer lows take to establish, the less chance of successful cases.
    • Prior periods 2023–2024 and 2021–2022 were very different in outcomes despite similar initial drops. Stocks bottomed more quickly and many more made it back to highs in 2023–2024.
  • For the 2025 period, it bears some similarities to each:
    • While the drop to ultimate lows was more like 2021–2022, the time it took was more like 2023–2024.
    • By this point in 2023–2024, many in the group were back at highs. The current group is still well off highs in general, although building right sides of bases in most cases.
    • On individual names, GEV looks like the first to have fully completed a base. CIEN looks more like the median stock in the group, still 21% off highs but on the upper–middle to right side of a base. MRVL is among the worst, with little recovery from lows, and mirrors many 2021–2022 cases.

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

Technical Setup

Shyam Metalics and Energy (SM2.IN, $3B market cap; $5M ADV)

 

TECHNICALS

  • The stock is forming the right side of a stage-one consolidation base and is 2% to pivot. It has immediate support near its 10-DMA (-4%) followed by its 21-DMA (-6%).
  • Fundamental ratings are expected to improve on the back of sales and margins expansion in the upcoming quarters. High Composite Rating of 83.
  • Strong technical profile: The stock has been under accumulation for the past two months indicating healthy money inflow. Up/Down Volume ratio of 1.1 indicates positive demand for stock. RS line is at an all-time high, with a strong RS Rating of 88.
  • Institutional sponsorship has increased to 59 (+51% y/y) as of March 2025.

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

The Vaneck Agribusiness ETF (MOO) was up for a fifth week this week and has risen 18% from recent lows. Over almost three years, it has had no >20% rally while remaining in a consistent downward-trending channel. The recent rise does look a bit more aggressive than other rally attempts, as it looks to retake and hold above the 40-WMA and break through the highs of the channel. While most group stocks are helping drive the ETF higher in the short, leading and/or still well positioned stocks include CTVA, IPI, MOS, DE, NTR, ICL, PYR.IN, OCIO.NL, and YARA.NO. Meanwhile, laggards and/or those with heavy resistance include TSN, ADM, ZTS, FMC, SQM, and BG

O’Neil Energy/Material Weekly – May 2, 2025

Posted on by Kenley Scott

On the back of a surprise raise to 2025 CapEx guidance for META ($64-72B from $60-65B), power-related names surged this week.
Our top pick is equipment and technology provider GE Vernova (GEV), which also just reported solid Q1 2025 earnings results. Also
just added to the U.S. Focus List is power EPC services company Quanta Services (PWR, covered in O’Neil Capital Equipment
Weekly). Other strong participants included NRG/CEG/VST/TLN (gas/nuclear-based power providers), which driving the
theme’s leadership reemergence.

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

TECHNICALS

  • The stock is 1% away from the pivot of a stage-one consolidation base. It is 7% off highs with immediate support near its 21-DMA (-1%) followed by its 50-DMA (-7%).
  • Decent Fundamental Profile: EPS Rank 72 and best-in-class SMR Rating of A. Strong earnings growth estimates for FY25.
  • Mixed Technical Profile: Up/Down Volume Ratio of 1.8 indicates positive demand for stock. RS line is trending upwards, with a strong RS Rating of 94. However, Acc/Dist rating of C- indicates selling pressure.

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

KEY FUNDAMENTAL POINTS

  • Taiyo Holdings is a Japan-based global chemical manufacturer known for its leadership in solder resist (SR) materials used in printed circuit boards (PCBs). The company holds >53% of the entire global market for liquid-type solder resist. It is also nearly monopolistic in dry film solder resist market with at least 84% global share.
  • The company operates under three main business segments: Electronics (68%); Medical and Pharma (28%) and ICT/Sustainability (4%). 64% of its total revenue comes from international markets.
  • Taiyo’s electronic segment is expected to benefit from surging global demand for advanced PCBs in AI, EVs, HPC, and IoT applications, alongside its ongoing expansion into non-SR electronic materials.
  • The company is expanding beyond the cyclical electronics business. It is capitalizing on high demand for long-listed drugs in Japan, driven by healthcare cost pressures and supply shortages.
  • It aims to become a key player in the growing Contract Development and Manufacturing Organization (CDMO) sector, providing end-to-end solutions in drug development and manufacturing.
  • The company has also significantly increased its R&D expenditure by ~40% to reinvest into next-gen materials, pharmaceuticals, and green tech- all high-growth, high-value sectors

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

FedEx Corp. (FDX) – reported Q3 FY24 results and cut its full-year earnings forecast for the third consecutive quarter.
Adjusted EPS came in at $4.51, missing estimates of $4.57, while revenue of $22.2B beta estimates by 1%. The company
lowered its FY24 adjusted EPS guidance to $18.0-$18.6 (previously $19.0-$20.0), and capital expenditure outlook to $4.9B from
$5.2B. Operating income fell slightly short of expectations at $1.51B vs. estimates of $1.52B, while the adjusted operating
margin of 6.8% missed estimates by 26 bps. The company continues cost-cutting efforts under its DRIVE initiative but cited
macroeconomic weakness, lower fuel surcharges, and reduced shipment volumes as headwinds. FedEx is moving forward
with its Freight segment spin-off, while the Express segment benefited from cost savings and volume growth. The stock
declined ~6.5% and is trading below all its key moving averages. It is 22% off its 52-week highs. Weak money flows with strong
selling pressure over the last nine weeks.

O’Neil Energy/Material Weekly

Posted on by Kenley Scott

ZTO Express (ZTO), reported mixed Q4 FY24 results with revenue (+22% y/y) beat of 12% and EPS (+21% y/y) missing estimates
by 3%. Parcel volume grew by 11% y/y. Revenue was driven by an increase 6in express ASP by 13 cents driven by strong account
mix, offset by lower per parcel weight and higher incentives. The management expects FY25 parcel volume in the range of 40.8B to
42.2B, representing a growth of 20-24%. The stock is forming a stage-one consolidation base and is 27% to pivot. It is currently
testing support at its 100-DMA with next support at its 50-DMA (-3%). Strong technical metrics indicate healthy money inflow and
positive demand for stock. Strong Fundamental Profile: EPS Rank of 87 and best-in-class SMR rating of A. RS Line pulled back from
recent lows with an RS Rating of 68