Is United Natural Foods Headed for a Breakdown?
Shares of United Natural Foods Inc. (UNFI) had been trending up through March but then kept falling and hitting a support line. If the stock breaks th...
Shares of United Natural Foods Inc. (UNFI) had been trending up through March but then kept falling and hitting a support line. If the stock breaks through this level, a breakout could soon occur. Read more to learn how to take advantage of this trade.
United Natural Foods Inc. (UNFI) is a wholesale distributor of natural, organic and specialty foods and nonfood products across North America. The company's products consist of national, regional and private label brands grouped into grocery and general merchandise, produce, perishables and frozen foods, and personal care items.
The company has been benefiting from increased e-commerce solutions that have been generating more revenue. For instance, UNFI recently launched Community Marketplace — a business-to-business digital e-commerce solution. This platform is designed for emerging brands, to help them expand distribution with UNFI's customers.
The company only had $39 million in cash as of the end of April, but that is still more than its short-term debt of $24 million. However, its net profit margin is flat and its debt-to-equity ratio is high at 2.8.
Sales growth has been strong, with an average growth rate of 26.5% over the past five years. But analysts forecast 1.3% year over year growth in the current quarter. Earnings are expected to fall 24.5% year over year this quarter.
The stock appears undervalued with a trailing P/E of 13.64 and a forward P/E of 9.8. The stock had been trending up the first three months of the year, but has shown mixed momentum over the last three, as shown in the chart below.
Take a look at the 1-year chart of UNFI below with added notations:
Chart of UNFI provided by TradingView
At the beginning 0f 2021, UNFI had stalled at the $32 mark a few times before finally breaking above it, and after that break the same $32 level has become key support (green). UNFI looks like it may be falling to that support level once again.
A break of $32 could mean much lower prices for the stock. A trader could enter a short position if the stock breaks under the support level.
Want to Discover More Great Trades?
I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don't work at all.
That is why I recently put together this special report to help investors focus on the only 5 chart patterns that matter…the ones that lead to the most timely and profitable stock trades. Click below to get your copy now!
Have a good trading day!
Christian Tharp, CMT
UNFI shares were unchanged in premarket trading Wednesday. Year-to-date, UNFI has gained 112.27%, versus a 17.73% 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.Is United Natural Foods Headed for a Breakdown? appeared first on StockNews.com
Entrepreneur Editors' Picks
This Founder Quit His 'Prison'-Like Teaching Job Within 2 Months. Now, He and His Sister Are Helping Other Teachers Leave the Classroom and Achieve Financial Freedom.
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Facing More Than 15 Years in Prison, This Founder Transformed His Hustle Into a Powerful Personal Brand and Business. Now, He's Giving Back in a Big Way.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate