RSS
McGraw-Hill (MHP) Looks Like A Buy At Current Levels
Author: Moby Waller (info)
Website: http://bigtrends.com
Posted: August 28th, 2008 at 8:03 am EST
Post your thoughts about this article. Click here!
Disclosure: I have recommended a Bullish Options position on MHP to my Advanced Options Strategies subscribers.
This article is written by Moby Waller, to find out more about
the services he runs for BigTrends, please call 1-800-244-8736. “McGraw Hill (MHP) Looks Like a Buy on Current Pullback to Support”
“McGraw-Hill (MHP) came to my attention recently through my technical screens of potential bullish breakout stocks. I always examine the fundamentals of a stock I’m considering short-term trading, to look for possible pitfalls and event risk. MHP’s recent earnings report was mixed, but did beat estimates — certainly their Standard & Poors division is in the spotlight/hotseat currently with the credit crisis. The company pays about a 2.0% dividend currently — they have paid a dividend each year since 1937 and are apparently one of fewer than 30 companies in the S&P 500 Index that has increased its dividend annually for the last 35 years. I like the healthy numbers I see for % Profit and Operating margins, as well as good ROA & ROE numbers (according to the data on Yahoo Finance). While the company is commonly known for being a large publishing house (especially in education), I was interested to see that they also own several very nice brands/companies, such as Standard & Poors, BusinessWeek Magazine, JD Power & Associates, Platts, Aviation Week and also 4 ABC TV affiliates and 4 Azteca TV affiliates. I always feel that any company with such powerful brands is a prospect to unlock brand values in some way and/or a possible takeover candidate — with a $14 billion market cap and about $1.7 Billion in debt (again, according to Yahoo Finance), a takeover or some other way to unlock brand value could certainly be a possibility in my view. Do I have any rumors or information that any kind of deal like that is upcoming - NO — but it is always a small possibility in a situation like this, and is something nice to have in your favor when taking a long position.The charts were what drew me to MHP in the first place, and I like the stock here on the recent pullback. The Daily Chart below shows that the shares have been bumping up against the top of the recent trading range around 45 — there was a recent break above the Top Acceleration Band combined with a Percent R breakout, which was an initial bullish signal to me. Now, I see the currrent pullback to the 40-Day Exponential Moving Average and the Middle Acceleration Band as a very nice low-risk entry point, preceding another re-test of the old highs around 45 and a likely breakthough above.
MHP Daily Chart
The Weekly MHP Chart below shows that we are staying in the Upper Half of the Bands and should have strong support here from the Middle Acceleration Band and the 40-Week Exponential Moving Average. I anticipate the next test of the 45 area will result in an upside breakout, with 50 as the first target — the 40 strike should contain any further pullbacks.
MHP Weekly Chart.
I like to have the Fundamentals, Daily & Weekly charts all working in my favor when I make trade recommendations to my clients.
Bottom Line: In this case, all 3 are working together to create my overall view that the current pullback on MHP to the 41-42ish area represents a good low-risk entry point. My first near-term target is a re-test of the 45 area, followed by a breakthrough to the 50 level.”
Moby Waller,
Portfolio Manager, Advanced Options Strategies
BigTrends.com
Post your thoughts about this article. Click here!
Investing, Moby Waller, Options, Sectors, Stock Market, Stocks, Trading
Know someone who would like this article?
EMail This Post
No comments yet
Leave a Reply
|
StockWeblog.com Weekly Update Newsletter
|