BidCorp (BID ZA)

BidCorp is an international broad-line food service group with a presence in developed and developing economies on five continents. Key customers include catering groups and the restaurant industry. The company's most significant markets are the UK and Europe.

The industry enjoys relatively high barriers to entry, as significant capital is required to build not only logistics infrastructure, but also human capital. Other key barriers would be Bidcorp's e-commerce platform and strong customer relationships.

Beyond the benefits of operating leverage as restrictions ease, and the turnaround of underperforming businesses, there is significant scope for growth through market share gains and mix improvements.

Technically, an incomplete rising wedge pattern makes the share attractive as an investing option (see the black converging trendlines on the main chart as well as the insert). This pattern turns bearish once it has matured. The expectation is that the price will first test the upper range of this pattern before correcting.

According to the Relative Strength Index (RSI), the share will be overbought at ~R405.00. This classifies our profit target of R389.00 as realistic.

Technical analysis