Many areas come into play when looking for stocks to add to a portfolio. Smart investors look for good earnings, dividends and solid growth prospects. In other words, strong fundamentals. One other area that can help complete good research is a technically strong stock. By reviewing a stocks chart pattern and looking at the volume of shares traded investors can combine technical and fundamental analysis.
The consumer staples research team at Bank of America/ Merrill Lynch (NYSE: BAC) did just that. They looked through their universe of consumer staples stocks, which are stocks that sell products that people use on a regular basis, and reviewed their buy rated names that had the best technical profiles. They offered up a blue chip group of stocks, with some technical reasons why.
Altria Group Inc. (NYSE: MO). The overall pattern for MO is a consolidation within an uptrend. Support at $30 continues to hold and the potential is for a continuation of the uptrend toward projected rising channel resistance at $40. A break above very nearby resistance at $33-34 would confirm this idea. Altria closed Friday at $33.45 and yields 5.30%.
ConAgra Foods, Inc. (NYSE: CAG). is completing a 14-year base or bottom on the breakout above $30. The highs from January 1999 and December 1997 provide resistances at $34.00-34.00 and $38.75, respectively, but the big base projects longer-term upside to $45. Holding the $30-28 area keeps the breakout firmly in place. Additional support chart is $27.45 to $25.90. ConAgra closed Friday at $33.23 and yield $3.10.
Kellogg Company (NYSE: K). Kellogg (K) is breaking out from a four year triangle pattern. Sustaining a rally above $57-56 confirms this idea and favors a rally to rising channel resistance at $67-68. The triangle projects up to $80 longer-term. Key support is $57-54 with additional support in the $46-45 area. Kellogg closed Friday at $58.84 and yields 3%.
Kimberly-Clark Corporation (NYSE: KMB). Kimberly-Clark is on the Most Attractive Buy (MAB) List and a favored stock for 2013. With a big base in place and a rising channel that project to $95-100. Initial projected resistance is $90, but the stock is building a triangle pattern that if completed would likely lead to a rally above the $90 area. Nearby support is $83-80 and holding this level would keep the developing triangle pattern intact. Additional uptrend and chart support is $75-72. Kimberly-Clark closed Friday at $86.26 and yields $3.40%.
Pepsico Inc. (NYSE: PEP. PepsiCo (PEP) has tested and held support at $68-67. The technical pattern has firmed and favors a rally to the $80 area with projected rising channel resistance at $85. Continuing to hold $68-67 keeps the pattern bullish. Additional chart support is $61-58. Pepsico closed Friday at $72.49 and yields 3%.
These well known, buy rated stocks have several things in common. Strong consumer name recognition and products. Good earnings growth and dividends which have consistently grown as well. Plus the added insurance of a strong technical readout. When investing it's always good to have us much information as possible to make your decision.
Filed under: 24/7 Wall St. Wire, Analyst Calls, Consumer Goods, Consumer Product Tagged: BAC, CAG, K, KMB, MO, PEP, Tobacco stocks