Stock Picks: Fluor Corporation and F5 Networks Incorporated

The S&P 500 (SPX) showed indecision yesterday, April 23, as it moved as high as 2,682.86 but closed the day at 2,670.29. If the index once again revisits 2,600, the support may no longer hold. Stay defensive and only invest in stocks that have strong bullish sentiments like the names that we have below.

FLR – Fluor Corporation

Fluor Corporation (FLR) is a multinational Fortune 500 publicly-traded engineering, procurement, fabrication, construction (EPFC) and maintenance company founded in 1912. It provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, and project management services in the following segments: Energy, Chemicals & Mining; Industrial, Infrastructure & Power; Government, and Maintenance, Modification & Asset Integrity (MMAI). The company’s subsidiaries include American Equipment Company, Inc., Otay River Constructions, and ADP Marshall, Inc., among others.

Technical analysis show that FLR has taken out resistance of 60 on April 23, 2018. The price action triggered the large inverse head and shoulders pattern on the weekly chart. The breakout was validated by heavy volume as volume rose by over 107% yesterday. In addition, the RSI is not yet in overbought territory. Expect the stock to follow through in today’s trading to further validate the trend reversal.  

Furthermore, fundamental analysis show that the trailing twelve months (TTM) price to earnings ratio (PE ratio) of FLR is 45.21. While the PE ratio tells us that the stock is already expensive, its five-year maximum of 58.92 shows that it has some more room for growth.

The strategy is to buy as close to 60 as possible. If bulls continue to hold this level, they may create a base and move to our target of 80. The process may take more than a year.

Weekly FLR Chart

Monthly FLR Chart

As of this writing, the Fluor Corporation stock is trading at 61.48.

Summary of Strategy

Buy: As close to 60 as possible.

Target: 80

Stop: 54

FFIV – F5 Networks Incorporated

F5 Networks Incorporated is an American company that develops, markets, and sells application delivery networking (ADN) for the security, performance, availability of servers, data storage devices, and other network and cloud resources. It offers products based on its Traffic Management Operating System (TMOS) and Access Policy Manager (APM). The company operates primarily in the United States but also in Europe, the Middle East, Africa (EMEA), Japan, and the Asia Pacific region (APAC). F5 Networks was incorporated in 1996.

Technical analysis show that FFIV has taken out 149 resistance on April 13, 2018 and triggered the large cup and handle pattern on the daily chart. The price action was validated by extremely heavy volume and a follow through that saw the stock go as high as 161.58 on April 17. At this point, however, FFIV was already flashing overbought signals. It needs to correct and create a new base to keep its ascent sustainable. That’s where you can come in.

In addition, fundamental analysis show that FFIV’s trailing twelve months (TTM) PE ratio stands at 24.34. It may look like the stock is already fairly valued but it’s five-year maximum of 33.68 indicates that investors believe in the company’s potential for growth.

The strategy is to wait for the dip and buy as close to 149 as possible. As long as FFIV is above 149, it has enough bullish momentum to reach 183.

The process may take more than a year.

Daily FFIV Chart

Weekly FFIV Chart

As of this writing, the F5 Networks Incorporated stock is trading 157.72.

Summary of Strategy

Buy: As close to 149 as possible.

Target: 183

Stop: close below 140.


Featured image courtesy of Shutterstock.

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, 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.