3 Stocks Approaching Buy Points In Their Current Bases
Wyndham Hotels & Resorts (NYSE: WH), ArcBest (NASDAQ: ARCB) and Norfolk Southern (NYSE: NSC) are among stocks nearing buy points from constructive consolidations. Stocks nearing breakout points are worth watching...
, and Norfolk Southern (NYSE: NSC) are among stocks nearing buy points from constructive consolidations.
After a shaky start, domestic indexes finished last week with gains. That kind of positive action means stocks nearing breakout points are worth watching this week to see if they can muster up the price and volume strength to begin fresh rallies.
Wyndham Hotels has been forming a flat base since pulling back from a November 5 high of $89.48. For a time, the stock was finding support above its 10-day moving average, but on November 26, it gapped down 4.38% in heavier-than-normal volume as the broader market also retreated on renewed Covid concerns.
Of course, a stock in the travel industry is viewed as especially vulnerable to Covid slowdowns. Wyndham remained below its 50-day moving average until December 21, when it rose 3.69% to end the session at $84.31, 1.5% above the 50-day line.
The stock closed Thursday at $88.31, just 1.3% below that prior high that’s currently that buy point.
Wyndham, like many hotel operators, was hit hard during the pandemic as business and leisure travel both slowed. The company remained profitable in 2020, but annual earnings slipped from $3.28 per share in 2019 to $1.03 per share.
This year, analysts expect earnings of $2.98 per share, which would be a gain of 189% over last year.
Even if Wyndham fails to clear that buy point in the next week or so, it’s potentially still a good watch list stock as long as the forecasted rebound in earnings remains intact.
ArcBest is a mid-cap that specializes in less-than-truckload trucking operations. The stock cleared a cup-with-handle base with a buy point above $91.33. It then rallied to a November 5 high of $116.79 before pulling back and getting support at its 50-day average.
Shares closed Thursday at $111.64, up $3.67 or 3.40%. That was 8.7% above the stock’s 50-day line.
The current base has corrected 16% so far, one percentage point higher than the parameters for a flat base. The current buy point is above that prior high of $116.79, although if the stock goes on to form a handle, a lower entry point may present itself.
Earnings grew at double-or-triple digit rates in each of the past five quarters. Revenue grew at double-digit rates in each of the past four quarters. According to MarketBeat earnings data, ArcBest beat both earnings and revenue views in each of the past five quarters.
Earnings grew in 2020 from 2019. This year, analysts see earnings growing 140% to $7.76 per share.
Analysts have a “buy” rating on the stock with a consensus price target of $96.64, representing a 13.44% downside, MarketBeat analyst data show.
Freight railroad operator Norfolk Southern is currently etching a cup-with-handle base with a buy point above $291.73. The stock actually cleared a previous cup buy point above $295.14, rallying to a high of $296.06 on October 29. It then retreated and is now forming a second handle.
Like many other stocks, Norfolk Southern closed sharply lower on December 20, but rebounded in the subsequent three sessions.
Norfolk Southern is one of the dominant railroads on the east coast of the U.S. With logistics and operations improving industry-wide, growing efficiency should have a positive effect on the bottom line. For example, the company has been able to adapt to the current labor shortage by expanding the length of trains. In other words, more cargo is moving despite fewer workers. That bodes well for both revenue growth and cost containment, both of which contribute to earnings.
Norfolk Southern is a large cap, with a market capitalization of $69.97 billion.
The company has increased its dividend in each of the past five years. In fact, MarketBeat dividend data show the company has a longer history of increasing dividends, interrupted only by 2016, when the dividend remained the same as in 2015.
The combination of earnings growth, technical strength and dividend growth make Norfolk Southern a good stock to watch or add to your portfolio.