Stock Pick: Juniper Networks (JNPR)

Juniper Networks (JNPR) is a multinational company that develops, manufactures, and markets high-performance networking and cybersecurity products. The company offers robust networking and cybersecurity solutions for both the public and the private sectors including national governments, firms providing cloud-based services, services providers, and other ventures. The company generated sales of $4.647 billion in 2018 and has a labor force of 9,283 employees.

Technical Analysis of Juniper Networks (JNPR)

JNPR is a stock that looks ready to breakout. What’s even more interesting is that it has remained relatively dormant in the last five years while other stocks in the S&P 500 have been significantly ascending. This is an indication that JNPR is a good counter trend pick. In other words, JNPR might rise while others succumb to profit taking. This is why we’re considering the stock even under current conditions.

Technical analysis reveals that JNPR is creating a large ascending triangle on the daily chart. We believe that it will breakout in favor of the bulls for the following reasons.

First, the diagonal support of the triangle has been keeping the stock alive since October 2002 when the market was trading around $5. JNPR has managed to bounce every time it touched the support. It will take bears a tremendous amount of energy to take out a support that has existed for over 16 years.

In addition, the 50 moving average (MA), the 100 MA, and the 200 MA on the monthly chart are all crawling around the diagonal support. They will act as additional supports that will give JNPR more cushion. They might also be instrumental in the breach of immediate resistance of $30.

Fundamental Analysis of Juniper Networks (JNPR)

In addition to our technical analysis, fundamental analysis also supports our bullish view.

JNPR reported that its 2018 Q4 earnings beat estimates. The company reported an earnings per share (EPS) of 59 cents per share, which beat expert estimates of 57 cents per share. This comes on top of a strong third quarter as well. In Q3, JNPR was expected to post an earnings per share of 44 cents but the company managed to generate an earnings per share of 54 cents.

Also, the trailing twelve months price-to-earnings ratio (PE ratio TTM) of JNPR is 13.93. The stock is undervalued considering that the pe ratio TTM of the wireless equipment industry stands at 22.13. Looking at these figures, the stock has some upside potential.

The strategy is to buy on the breakout and retest of $30. If bulls can flip the resistance into support, the stock will likely generate the momentum to rally to our target of $37. Take that out and the next target is $45.

The timeline for the target is six months.

Weekly JNPR Chart


Monthly JNPR Chart


As of this writing, the Juniper Networks stock (JNPR) is trading at $25.95.

Summary of Strategy

Buy: Breakout and retest of $30 as support.

Targets:  $37 and $44.

Stop: Close below $28.60 after the breakout and retest.

 

Featured image courtesy of Shutterstock.

Disclaimer: The writer does not own shares of Juniper Networks. (JNPR).

Kiril is a CFA Charterholder and financial professional with 5+ 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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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