Is a Breakdown in the Charts for Vista Outdoor?
A level of support has formed in the chart of Vista Outdoor Inc. (VSTO). The stock has tested that level several times and if it falls through, a brea...
A level of support has formed in the chart of Vista Outdoor Inc. (VSTO). The stock has tested that level several times and if it falls through, a breakdown is expected. Read more to learn how to take advantage of this trade.
Vista Outdoor Inc. (VSTO) designs, develops, and manufactures outdoor sports and recreation products, and is domiciled in the United States. The company organizes itself into two segments: Shooting sports and Outdoor products. Shooting sports includes ammunition and long guns, and Outdoor products include archery and hunting accessories.
The company is benefiting from growth in both of its segments as shooting sports were up 39% year over year and outdoor products were up 38% in the most recent quarter. This has been driven by consumer trends that continue to show high demand for outdoor activities. Plus the demand for ammunition is not slowing down anytime soon.
VSTO had $209 million in cash as of the end of the last quarter compared to no short-term debt. The company is also highly efficient with a return on equity of 41%. Analysts forecast sales to rise 24.4% for the year, while earnings are expected to jump 66.9% this year.
The stock appears quite undervalued with a trailing P/E of 7.61 and a forward P/E of 6.72 leading to a Value Grade of A in our POWR Ratings system. VSTO was showing bullish momentum from March to May, but performance has been mixed, as evident in the chart below.
Take a look at the 1-year chart of VSTO below with added notations:
Chart of VSTO provided by TradingView
VSTO has tested the $38 level (green) as support several times over the past few months. The stock may be falling back down to that support again.
A break of the $38 support level likely means lower prices for VSTO. Therefore, a trader could enter a short position if the stock breaks below $38, with a protective stop placed above the entry point.
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VSTO shares were unchanged in premarket trading Wednesday. Year-to-date, VSTO has gained 69.82%, versus a 17.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.