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Penny Stocks Struggle In November, Creating Opportunity For Gains

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Penny stocks weakened beginning in October, with market players focusing on tax cut legislation hoping to boost blue-chip earnings in upcoming quarters, according to the Investopedia Stocks to Watch for November. The Russell-2000 small-cap index suffered, while the S&P 500 and Nasdaq Composite rose to all-time highs.

Speculative fervor through year’s end is expected to push penny stocks, although improved returns may need to wait until the 2018 January Effect.

Plug Power Inc. had the best group performance in October, lifting more than 18% to a 2-year high, while other picks built basing patterns that signal a balance between buyers and sellers. Such issues are expected to gain ground as market players take profits in tax-sensitive blue chips and move into other opportunities.

Biotech stocks appeared to have topped out for the year after Celgene Corp. triggered a broad-based decline after withdrawing a critical drug application. As a result, the November list focuses on suffering technology stocks that could take advantage of broad fourth-quarter market leadership.

The top three penny stocks in November returned from the October list.

1. Plug Power, Inc. (PLUG)

Source: Investopedia

Plug Power, Inc., a manufacturer of fuel cells, rose from number seven in October to lead the November list.

The company sold off from a split-adjusted $1,565 in 2000 to an all-time low at 12 cents in 2013. The stock turned higher in March 2014, then stalled at $11.72 before falling to 83 cents in March 2017.

In the last seven months, the price spiked to $2.70, before suffering another fall. A breakout should target the May 2014 low at $3.65, which would mark a high percentage rally from the current level.

The company delivered a record third quarter this year, deploying nine GenKey sites, comprising 2,753 GenDrive units, and a unit increase of over 200% from the previous quarterly record.

Fulfillment of multi-site deals announced in the second and third quarters with Amazon and Walmart comprised the majority of order volume for the third quarter.

The company continued the expansion of its blue-chip customer base, successfully securing contracts with two large manufacturing clients in the U.S. automotive industry and one new customer in Europe. It completed $44 million in new bookings, bringing the year-to-date total to nearly $160 million.

2. MicroVision, Inc. (MVIS)

Source: MicroVision

MicroVision, Inc., a provider of ultra-miniature projection display and sensing technology, rose from the number 9 spot in October to number two in November.

The stock topped out at a split-adjusted $548 in 2000 before entering a downtrend that continued into a 2012 low at $1.11.

A 2013 bounce to $3.49 carved resistance, ahead of multiple reversals that have outlined a rectangular basing pattern. The stock rebounded in October 2016, entering an uptrend that has reached the upper half of its persistent trading range.

The stock broke out to a 22-month high in September and has since settled near $2.75, signaling an upside that could reach the 2015 high at $4.23.

The company in August sold 1.5 million unregistered shares to a private investor who is also a current shareholder at a price of $2.10 per share, for aggregate consideration of $3.15 million. MicroVision intends to use the proceeds from the issuance for general corporate purposes.

MicroVision’s display and sensing solution can be adapted to an array of applications and form factors. The company’s business model and product line offering includes display and sensing engines, licensing its patented technology and selling components to licensees for incorporation into their scanning engines.

In September, MicroVision and WPG Holdings, a distributor of semiconductor components in Asia, entered into an agreement for distribution of MicroVision’s line of PicoP scanning engines across Asia.

3. BioDelivery Science International, Inc. (BDSI)

Source: Investopedia

BioDelivery Science International, Inc. rose from the number 10 spot in October to the number three spot in November.

The stock broke above 7-year resistance at $8.26 in 2014, then rallied to an all-time high of $18.48 a few months later. A pullback in 2015 triggered a failed breakout, delivering a decline that continued into a November 4-year low at $1.50.

The stock tested that level in April 2017 and turned higher, supporting an uptrend to a 52-week high oof $3.60 in July. The stock fell in September, finding support at the 200-day EMA. It could bounce back to the third quarter high.

The company announced in September that Health Canada granted market authorization to formally transfer the Drug Identification Number (DIN) ownership of Belbuca (buprenorphine) buccal film in Canada to BDSI’s commercial partner, Purdue Pharma in Canada. This approval triggers a milestone payment to BDSI.

Belbua incorporates BDSI’s BioErodible MucoAdhesive (BEMA) drug delivery technology and is the only long-acting opioid that uses novel buccal film technology to deliver buprenorphine for appropriate patients living with chronic pain.

Belbuca was approved in Canada in June 2017 for the management of pain severe enough to require daily, continuous, long-term treatment and that is opioid-responsive and for which alternative options are inadequate.

4. Lightpath Technologies, Inc. (LPTH)

Source: Investopedia

Lightpath Technologies, Inc., a provider of optics, photonics and infrared solutions for the industrial, defense, telecommunications, testing and measurement, and medical industries, hit an all-time low at 30 cents in February of 2009 after a multi-year fall that began with the dot.com bubble in 2000.

The stock bounced to $3.67 a few months later, establishing a resistance level that lost in breakout attempts in 2010, 2013 and 2016.

An upturn in December 2016 hit another barrier in March 2017, giving way to a rounded base followed by an October breakout. The bullish price action opens the door to potentially rapid gains into 2006 resistance at $7.87.

Revenue for the first quarter of fiscal 2018 was approximately $7.6 million, an increase of approximately $2.6 million, or 51%, as compared to the same period of the prior fiscal year. The increase from the first quarter of the prior fiscal year is attributable to an approximately $3.1 million increase, or 579%, in revenues generated by infrared products.

Total cost as a percentage of revenue continues to decline, improving to 41% in the first quarter of fiscal 2018, compared to 49% in the first quarter last year.

Net income for fiscal 2018 first quarter was approximately $218,000, compared to approximately $140,000 for the first quarter of fiscal 2017.

5. Medical Transcription Billing Corp. (MTBC)

Source: Investopedia

Medical Transcription Billing Corp., a healthcare information technology company that provides a fully integrated suite of proprietary web-based solutions, together with related business services, to healthcare providers practicing in ambulatory care settings, went public in July 2014 at $5.00 and suffered an immediate downtrend that continued to the April 2017 all-time low at 29 cents.

The stock improved a few sessions later, topping out at $3.84 and falling into a broad basing pattern at the 200-day EMA.

The stock bounced off that level in early October, lifting to $5.44 and pulling back in a shallow trading range with support at $2.40. A breakout through the range top could build momentum buying interest that could lift the stock into the IPO print.

The company recently reaffirmed its 2017 revenue guidance of $31 million to $32 million, representing year-over-year revenue growth of approximately 30%. The recent signing of the largest client in the history positions MTBC for additional revenue growth in 2018.

During fourth quarter 2017, the company anticipates reporting record adjusted EBITDA in excess of $1 million for the quarter, together with continued improvement in GAAP net income and positive cash from operations.

6. Mannkind Corp. (MNKD)

Source: Investopedia

Mannkind, which focuses on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension, entered a shallow but persistent downtrend in 2004, posting a series of lower highs into 2015. Then the bottom dropped out, dumping the stock through 2012 support at $8.00 into a May 2017 all-time low at 67 cents.

The stock built a 3-month basing pattern above that price level and took off in a new uptrend that hit a 17-month high at $6.96 on October 10. The stock has since been pulling back and could reach strong support between $2.20 and $2.50, offering a low-risk trade entry ahead of a high bounce.

For the third quarter of 2017, net revenue for the company’s flagship Afrezza product grew 28% to $2 million, compared to the second quarter.

As of Sept. 30, 2017, the amount of Afrezza shipped to the wholesale and retail channels, but not yet recognized as revenue, was $3 million, an increase of $0.4 million from June 30, 2017.

For the nine months ended Sept. 30, 2017, total net revenue of $7.2 million was comprised of $4.7 million of Afrezza net sales, $1.7 million from the net sales of surplus bulk insulin to a third party, $0.6 million from the sale of certain oncology intellectual property, and $0.2 million from collaboration net revenue.

7. Kingold Jewelry, Inc. (KGJI)

Source: Investopedia

Kingold Jewelry, Inc., one of China’s leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products, posted an all-time high of $11.95 in 2010, then fell into a decline that ended at 88 cents in 2011.

The stock broke that support level in the second half of 2015, falling to an all-time low at 49 cents, then turned higher in a recovery wave that remounted broken support. This launched March 2016 buying signals, delivering an advance to a 4-year high at $2.84 in August 2016.

The stock carved a higher low in March 2017 and is now testing multi-year resistance, with a breakout above the 2016 high favoring upside that could reach $7.00.

For the three months ended Sept. 30, 2017, the company sold a total of 30.1 metric tons of gold, of which branded production was 14.6 metric tons, representing 48.6% of total gold sold, and customized production was 15.5 metric tons, representing 51.4% of total gold sold in the third quarter of 2017.

In the third quarter of 2016, the company sold a total of 20.6 metric tons, of which branded production was 10 metric tons, or 48.3% of the total gold sold, and customized production was 10.6 metric tons, or 51.7% of total gold sold.

For the nine months ended Sept. 30, 2017, the company sold a total of 72.2 metric tons of gold, of which branded production was 34.7 metric tons, representing 48.1% of total gold sold, and customized production was 37.5 metric tons, representing 51.9% of total gold sold for the period.

In the nine months ended Sept. 30, 2016, the company sold a total of 55.7 metric tons, of which branded production was 28.6 metric tons, or 51.4% of the total gold sold, and customized production was 27.1 metric tons, or 48.6% of total gold sold.

8. Alaska Communications Systems Group, Inc. (ALSK)

Source: Investopedia

Alaska Communications Systems Group, Inc., a provider of advanced broadband and managed IT services for businesses and consumers in Alaska, topped out in the upper teens in 2007, then began a downtrend that found support near $5.00 in 2009. The stock then broke that low in 2011, falling into a test of the 2002 low near $1.50.

The stock then built a 5-year basing pattern at that level and is now trading near a 2-year high. Its 2015 resistance around $2.50 marks the final barrier, ahead of a rally that tests long-term range resistance at $3.90, which it posted in 2013.

The buying impulse could offer high percentage gains.

Total revenue for the third quarter increased to $56.7 million, up 0.4% from $56.5 million.

Total broadband revenue reached $31.3 million, representing 55.3% of total revenue and up 6.8% from $29.4 million.

Operating income for the quarter was $3.5 million, compared to $4.1 million.
Net income was $0.3 million in both periods.

Net cash provided by operating activities was $8.6 million for the third quarter, compared to $9.5 million.

Capital expenditures were $13.5 million for the quarter, compared to $8.7 million.

9. Limelight Networks, Inc. (LLNW)

Source: Investopedia

Limelight Networks, Inc., a digital content delivery provider, ended a decline at $1.75 in 2008, then bounced to $8.97 in 2010. It returned to support in 2011 before breaking down four years later, dropping to an all-time low at 90 cents in February 2016.

The stock remounted broken support after the presidential election, beginning an uptrend that has reached a 6-year high of $5.18. The October breakout above the June 2015 high of $4.43 will likely get tested in coming weeks, with a pullback as low as $3.50 offering a buying opportunity, ahead of a trend advance near the 2010 high around $9.00.

Revenue for the third quarter was $46.1 million, the highest in 19 quarters, up 17% year over year.

GAAP gross margin was 48.4%, the highest in company history.

Gross margin expanded by 730 basis points year over year. Cash gross margin of 58.9% was the highest since 2008.

Non-GAAP net income was $2.2 million, the highest third quarter since 2007.

Adjusted EBITDA was $7.4 million, the highest third quarter in company history.

10. Sierra Oncology, Inc. (SRRA)

Source: Investopedia

Sierra Oncology, Inc., a clinical stage drug development company focused on advancing next-generation DNA damage response therapeutics for the treatment of patients with cancer, went public near $29 in July 2015, then began a downtrend that continued through a June 2017 all-time low of $1.10.

The stock turned higher in July, hitting the 200-day EMA in October and breaking out shortly after, marking the first time in the stock’s public history it closed above this long-term barrier.

An extended testing period could follow, with pullbacks to new support between $1.75 and $2.00 offering low-risk buying opportunities, ahead of penetration into the unfilled June 2016 gap between $3.00 and $6.20.

For the three months ended Sept. 30, 2017, Sierra incurred a net loss of $10 million compared to a net loss of $15.2 million for the three months ended Sept. 30, 2016. For the nine months ended Sept. 30, 2017, Sierra incurred a net loss of $31.4 million compared to a net loss of $38.6 million for the nine months ended Sept. 30, 2016.

Cash and cash equivalents totaled $107.8 million as of Sept. 30, 2017, compared to $116.7 million as of June 30, 2017, and $109.0 million as of Dec. 31, 2016. The company believes that its existing cash and cash equivalents will be sufficient to fund current operating plans through approximately mid-2019.

On Sept. 30, 2017, there were 52,268,443 shares of common stock issued and outstanding, and stock options to purchase 7,685,449 shares of common stock issued and outstanding.

The November penny stock watch list provides a balance between junior biotech and depressed technology plays, with multi-week basing patterns offering low-risk buying opportunities for patient market players.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Stock Picks: ADM and CELG

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The S&P 500 (SPX) continued its drop as it closed yesterday, June 18, 2018 at 2,773.75. We maintain our bullish outlook despite this slight dip. This brief pullback is most likely setting up the index for a higher low.

As SPX remains bullish, let’s look at stocks that show promise.

ADM – Archer-Daniels-Midland Company

The Archer Daniels Midland Company (ADM) is an American global food processing and commodities trading corporation.  Founded in 1902, they now have more than 270 plants and 420 crop procurement across the globe. The company processes and manufactures vegetable oil, protein meal, corn sweeteners, flour, biodiesel, ethanol, and other food and feed ingredients.

Technical analysis show that ADM is about to take out resistance of 47. This would trigger the large inverse head and shoulders reversal pattern on the weekly chart. To increase the odds of a successful breakout, the stock must generate volume of at least 7.2 million shares on the daily chart. Those who bought the higher low of 40 are likely to take profits at the resistance. ADM needs buyers to absorb the selling pressure.

Furthermore, fundamental analysis reveal that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of ADM is 15.93.  The stock appears undervalued considering that it has a five-year maximum of 26.46 and an average of 17.46. Plus, recent earnings report beat expert estimates. Based on these figures, the stock has some room to grow.

The strategy is to buy the breakout at 47 as long as the pair generates the required volume. Once breakout is complete, bulls have the momentum they need to climb to our target of 60.

The process may take more than three months.

Weekly ADM Chart

Monthly ADM Chart

As of this writing, the Archer-Daniels-Midland stock (ADM) is trading at 46.19.

Summary of Strategy

Buy: Buy the breakout of 47 after the pair generates 7.2 million volume on the daily chart.

Target: 60

Stop: Close below 45 after the breakout.

CELG – Celgene Corporation

Celgene Corporation (CELG) is an American biotechnology company founded in 1986. It discovers, develops and commercializes medicines and therapies for the treatment of cancer and inflammatory diseases. In their product portfolio are REVLIMID (lenalidomide), POMALYST/IMNOVID (pomalidomide), OTEZLA (apremilast), ABRAXANE (paclitaxel albumin-bound particles for injectable suspension), VIDAZA, azacitidine for injection (generic version of VIDAZA), THALOMID (thalidomide), and the epigenetic modifier ISTODAX. Celgene’s subsidiaries include, among others, Juno Therapeutics, Impact Biomedicines, Inc., Signal Pharmaceuticals, and Pharmion Ltd.

Technical analysis show that CELG appears to respect support of 75. This view comes after the pair has managed to stay above the support for the last four weeks. This is because bulls are starting to show up. The significant rise in volume in May 2018 indicates that bulls are buying the stock. On top of that, the stock is almost oversold, suggesting the possibility of a bounce.

In addition, fundamental analysis reveal that CELG’s trailing twelve months (TTM) PE ratio stands at 21.88. The stock appears fairly valued but it has a five-year maximum of 64.24 and an average of 44.44. Moreover, the company’s recent earnings report beat analyst estimates. Considering these figures, CELG has some upside potential.

The strategy is to buy on dips as close to 75 as possible. If bulls preserve the support, they may spark a rally to our target of 98.

The process may take more than three months.

Weekly CELG Chart

Monthly CELG Chart

As of this writing, The Celgene Corporation stock (CELG) is trading at 77.73.

Summary of Strategy

Buy: As close to 75 as possible.

Target: 98

Stop: Close below 74.

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 181 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Stock Picks: PANW, TCRD, EVLV

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

 

In our latest reviews, we highlighted the importance of insider transactions, which may lead to very high yield in the respective stocks. Today, we will again review the stocks with high insider activity. We won’t consider biotech companies here, as they may be very risky.

Palo Alto Networks (NYSE: PANW)

Number one by trading volume is Palo Alto Networks, quoted as PANW on NYSE. It belongs to the Technology (Networking & Communication Devices) sector. The insiders bought shares worth $13,380,262 in June.

Palo Alto Networks was founded in 2005 and is based in Santa Clara, California. It specializes in developing cyber security platforms for business throughout the world. As of now, PANW caters to over 50,000 customers in 150 countries.

Palo Alto Networks is a large company, although its IPO took place as recently as in July 2012.

In 2017, its earnings amounted to $1.8B, which is 28% more than in 2016. Through 2011-2016, Gartner named Palo Alto Networks as the leader in cyber and computer security. In 2016, Bay Area, an SF Business Times agency, named Palo Alto Networks as ‘the best place to work at’. Currently, over 5,100 people are employed with PANW.

Arora Nikesh, PANW CEO, bought shares worth $13,380,262 at $198.79 to $216.07. Curiously enough, Nikesh became CEO on June 6, and began buying shares as soon as on June 8. Before coming to PANW, Arora Nikesh was Executive Director at Google, and sold some Google shares in April.

It looks like Mr Nikesh got some free capital after selling Google and wanted to invest it as soon as possible. Eventually, after becoming CEO at Palo Alto Networks, he decided to buy some shares at his new company.

Financially, PANW is very reliable, with all latest earnings reports exceeding expectations of both the management and the analysts.

Over the last week, the stock broke out its historic resistance at $200 and is currently still growing.

On D1, the price broke the 200-day SMA as early as in mid 2017, and ever since there have been no resistance that could stop it. The ascending trend is still here to stay; with the record highs hit, there is no immediate resistance, while the support is at $200.

Meanwhile, the short float is as low as 4.93%.

THL Credit (NASDAQ: TCRD)

THL Credit, quoted as TCRD on NASDAQ, is our number two for today. This company belongs to the Financial (Asset Management) sector. The insiders bought shares worth $848,922 in June.

THL Credit was founded in 2009, and is headquartered in Boston, Massachusetts. This investment firm manages a total of $12.1B. THL Credit has regional offices in Chicago, Dallas, Los Angeles, and New York City. The company majorly invests funds into mid-price securities, which are chiefly stocks of the companies with a yearly turnover of at least $25M. THL Credit does not invest into startups or companies with large debts. The initial investment amount is $10M to $25M.

TCRD Q1 earning reports came positive, with a revenue of $16.7M; still, the stock price did not go up, as the analysts had expected the earnings to be at $18.3M. When the reports came out, the stock price went down by 13%. It may seem strange, as good earnings usually should mean the stock price rise, but, in practice, good news does not always lead to this.

Insider transactions were made by the Chief Operations Officer, Olson Terrence, who bought some THL Credit shares as early as in Sep 2017; by then, the price was $9 per share, and the total amount was $17,579. The next SEC report by Terrence came in March 2018, with shares worth $10,263. On the same day, two other board members bought shares worth $136,680 at around $8.20.

Terrence continued buying shares on April 16, and such buys occurred nearly everyday, up to now, with the minimum amount of $60,000 and the maximum at $139,000. We may soon learn the reason for such massive buys by Olson Terrence, as no other board member did it.

Technically, there is an descending trend, with the price being below the 200-day SMA. However, there is also a consolidation pattern formed since March between $7.70 and $8.00. On June 7, THL Credit broke out the support at $8.00 but failed to go through the resistance at $8.40, and is currently testing the upper boundary again.

EVINE Live (NASDAQ: EVLV)

EVINE Live (NASDAQ: EVLV) takes the third place today. This company belongs to the Services (Catalog & Mail Order Houses) sector. When it comes to insider transactions, it falls behind the leaders, with the total amount of just $52,572.

EVINE Live was founded in 1990 and is headquartered in NYC. The company focuses on selling goods via web, TV, mobile apps, and social networks. Through EVINE Live, one can buy jewelry, home appliances, textile, kitchenware, accessories, footwear, etc. The company has access to over 86M of homes through television, while also offering their products on evine.com.

EVINE Live issued its Q1 earnings report on May 30. The net sales came at $156.50M, which is 0.1% more than in Q1 2017, when the sales were $156.30M. However, the increase in sales did not help the company to make any profit, and its loss for Q1 2018 was $3M, which is 7% more than in Q1 2017. Overall, Q1 reports are far from optimistic.

However, two board members did buy shares, although the amounts are not that high, those being $6,032, $22,834, and $23,706. Before that, insiders bought shares as long ago as in Dec 2017, and the share price did not go up. What really matters here, though, is the current price, which is just $1.18; as long as it goes up by just 2 or 3 dollars, the yields will get doubled or tripled. Perhaps this is the very reason why the insiders bought the shares, while there may be some other reasons for that, of course.

Back in 1998, EVLV price broke out the 200-day SMA and had been growing for around two years. The price went from $4 up to $65, with the yield being 1,500%, although it had been trading for long below $5. This may repeat any time in the future.

Currently, the price is making its second attempt to break out the 200-day SMA and form an ascending trend. The support is at $0.90, and the immediate resistance lies at $1.60.

Short positions are scarce, with the short float being below 1%.

 

Disclaimer

Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 3 rated postsHaving majored in both Social Psychology and Economics, Dmitry went on to continue his education in post graduate. He then worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped him to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. Dmitry is a pro in the financial field who authors articles for various international media. He also holds the position of Chief Analyst at RoboForex.




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Stock Picks: UAL and AES

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The S&P 500 (SPX) pulled back last week. This dip is healthy as it enables the index to regroup before mounting a push to take out resistance of 2,800. The surge in volume on Friday, June 15, 2018 gives us confidence that bulls are once again buying.

With the SPX flashing signs of strength, let’s look at stocks that offer profitable trade setups.

UAL – United Continental Holdings Incorporated

United Continental Holdings Incorporated (UAL) is an airline holding company that transports both people and cargo. The company owns and operates United Airlines, Incorporated and has air rights in North America, Asia-Pacific, Europe, Middle East, Africa, and Latin America. As of 2016, the company has total assets worth $40.140 billion.

Technical analysis show that UAL is creating a large cup and handle continuation pattern on the weekly and monthly charts. This view comes after the pair generated a higher low of 60.44 in February 2018. The stock has been rallying since and it looks primed to take out resistance of 75.

To complete the breakout, the stock must print 6 million shares on the daily chart. Those who bought the higher low are likely to take profits at 75. The stock needs buyers to absorb the selling pressure.

Furthermore, fundamental analysis reveal that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of UAL is 10.13.  The stock is undervalued considering that it has a five-year maximum of 52.80 and an average of 13.80. Based on these figures, the stock has some room to grow.

The strategy is to buy the breakout at 75 as long as the pair generates the prescribed volume. Once breakout is complete, bulls have the momentum they need to climb to our target of 100.

The process may take more than three months.

Weekly UAL Chart

Monthly UAL Chart

As of this writing, the United Continental Holdings Incorporated stock (UAL) is trading at 73.80.

Summary of Strategy

Buy: Buy the breakout at 75 after the pair generates 6 million shares on the daily chart.

Target: 100

Stop: Close below 70.

AES – The AES Corporation

The AES Corporation (AES) is a Fortune 500 company based in Arlington, Virginia. It generates and distributes electrical power in 15 countries and employs over 10,000 people all over the world. In 2017, the company generated $11 billion revenues while managing assets worth $33 billion.

Technical analysis show that AES is attempting to break out of the cup and handle pattern on the weekly and monthly charts. However, it appears that the stock is not yet ready to take out resistance of 13.

We have this view because the monthly and weekly candles are detached from the 4-day, 8-day, and 21-day moving averages. This tells us that the move up is not sustainable. Also, the pair is flashing overbought readings on the weekly chart. What we can do is to wait for a slight pull back before placing buy orders.

On the other hand, fundamental analysis reveal that AES’s trailing twelve months (TTM) PE ratio stands at 27.98. The stock appears overvalued but it has a five-year maximum of 105.43. In addition, recent company earnings report beat expert estimates. Considering these figures, AES has some upside potential.

The strategy is to buy on dips as close to 12 as possible. If bulls preserve the support, they may finally take out resistance of 13 and ignite a rally to our target of 15.50.

The process may take more than three months.

Weekly AES Chart

Monthly AES Chart

As of this writing, The AES Corporation stock (AES) is trading at 13.10.

Summary of Strategy

Buy: Buy on dips as close to 12 as possible.

Target: 15.50

Stop: Close below 11.50.

 

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 181 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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