I have previously been confused about companies trading below 10x their earnings. However Benjamin Graham has shown that this is either an indication of three posibilities:
1)the market is in a depressed state and many companies are trading low.
2)The company is going down hill or is in trouble financially, with the law, etc.
3)or for pure ignorance the company is not trading for what it's worth
The first two don't seem prevalent to this company, however the earnings have been fluxuating. I feel that below 1900$ is a wise purchase if you are looking at owning for a year or more. These fluxuations can hurt the day trader but this company seems to have a strong base, is not in danger of financial burden, pays a dividend(although small), is expanding, and does not engage in shareholder dilution.
Then why the low price, because people are hesitent to pay 1400+ for one stock (even though 1 stock represents a large part of the company), the price has jumped dramatically over a short period, and people are selling to get a profit now. These are possibilities to what is making the stock cheap. But over the long term i beleive a company like this could prove to be of great value. I know this is a cylical industry, but cycle or not this is very low p/e number.
I'm not an expert on candlesticks. I use them as another indicator, mainly to help me decide when to sell. I started my position on 12/9 thinking roughly 10% off the top was a good entry point. Bought some more on 12/12. Would have put in stop loss if Ameritrade allowed and probably would have been stopped out on 12/15 (wasn't home that day). Thought we were OK when we crossed back over the 50dma. I thought the 27th was mostly "last day of tax loss selling" but I think this allowed the shorts to build some momentum for the remainder of the year. some of the people who bought in Oct/Nov, missed the top and were now seeing their profits disappear would have been tempted to lock in what profit they had left. Fortunately, since the stock is largely held by insiders and long term investors the shorts seem very vulnerable. Bought a few more shares on 1/3 but not really a Bollinger Bands decision (just starting to average down). Will probably buy a few more as long as we don't go below 200dma. Barring a major disappointment in February I can see SEB moving back up accelerated by short covering. Hopefully, we'll make a little money.
I'm reading Nison's book "The Candlestick Course" currently. Some very interesting formations. Note, at the top in July, before the correction, a tweezers formation on the weekly chart. Certainly picked the top.
I'd be interested in your thoughts on the actions from the last month. It looks like were traveling in a downward channel. Closed today on the support line made by the close on the 15th.
Bollinger Band is showing another squeeze formation coming. Either we're going to break out heavy on the upside, or break the downside and retest the 200 dma. Daily MACD Hist is showing that we should be moving into the positive region next week. Intraday MACD Hist (1 hour and 2hr) show a bearish divergence. Thus, most of the technical indicators are giving a bullish signal.
The difficult side is that there are so many resistance points to break on going back up, including the 60 dma, 30 dma, as well as the necktie at 1628.
Next week should be interesting.
I agree, I use Ameritrade's Advanced Analyzer as my charting tool. I like the "candlesticks" and I try to get a view of money flow which turned back up at the end of the year. I also agree if we break the 200dma in a meaningful way, it will be time to bail. Right now, it looks pretty solid with some trepidation leading up to Feb. earnings report.
I think the earnings for this company will have less to do with shipping rates or pork price trends and more to do with whether Harry B. wants to show another strong quarter. I wish I knew more about the foreign earnings repatriation impact ( might be a good question for the conference call).
sorry if I misread your post.
In fairness, I'm having problems drawing the trend lines. However, many of the stocks I am tracking, including a few that I own (like FTO) have significantly deviated out of their past 2-3 years channels and have started to define a new channel. I don't know what that means exactly. A new P/E range? Decelerating earnings velocities? I'm still struggling with this one. Is it good or bad. I just don't know yet.
SEB has diverged out of the new channel I drew just a month ago. That does concern me a bit. However, the bigger deal is that the stock bounced off it's 200 dma (good news). It hasn't broke through (even during the big correction in May) in the last 2 1/2 years, since starting its big run-up. If it broke through (200 dma), and held for 2-3 days (below) ....I'd be out.
I think this is all part of the 'cleaning out the weak hands' mechanism, before restarting another hard climb.
Thanks for the nice words.
And the ongoing battle of fundamentals versus technicals. Funny enough, I tend to use both. However, I don't buy a stock with the intention of holding it for 2 to 3 years. And I don't have a crystal ball. I couldn't predict the current correction (now down to 1495, again) when it was at 1840. Yeah, maybe I should have sold at the 1800 level, after it made a 54% plus climb from 1165. But I didn't. I also didn't expect the correction to be so steep (all the way to the 200 dma). So much for a muddy crystal ball. But the technicals say that the stock is finding good support at 1495, and historically hasn't successfully penetrated the 200 dma.
Oh well. You have a nice day.
I read the 10K primarily because "searcher" pointed to it as his source when he implied management is predicting lower earnings. What I found was a standard disclaimer that basically said "things have been good, but we can't guarantee it will be that way in the future." I didn't find that particularly alarming.
I'm more concerned that you are having second thoughts, because I believe I was on the same wave length with your earlier posts. Thanks for you thoughful response.