Most stocks trade in a predictable range, so it makes sense to be aware of the level a stock is at in regards to this range before buying or selling. Traders and investors can make significant gains if they buy at the bottom of the recent trading range and sell at the top. With that in mind, I have identified three companies that have very solid fundamentals and earnings, which have also recently hit the bottom of the recent trading ranges. With these stocks trading at key support levels and near the bottom of the recent trading range, it's likely that investors who buy now will be able to participate in gains as these stocks could be poised to move higher. Here are the stocks to consider:
Procter & Gamble (PG) is currently trading about midway of the 52-week a range of $57.56 and $67.72 per share. Procter & Gamble shares offer an attractive dividend payment of $2.10 per year, which is equivalent to a 3.3% yield. The PE ratio is also at a reasonable level with earnings estimated at about $4.58 per share in 2012. The stock recently dropped from the $66 level, after the company reported weaker than expected earnings and plans to layoff about 1,600 employees. The stock has dropped to about $63 per share which has been the low-end of the recent trading range. This has been a excellent buying point and investors buying now are likely to see a rebound back to the high-end of the recent trading range around $66 per share.
Wellpoint, Inc. (WLP) offers a variety of insurance and health benefit programs. The stock is trading significantly below the 52-week high of $81.92. These shares dropped several days ago, from the $72 level after the company reported a drop in Q4 profits. However, earnings are expected to be stronger in the coming quarters and estimates are at $7.75 per share in 2012. Wellpoint pays a dividend of $1 per share which provides a yield of 1.4%. The stock is currently trading at the low-end of the recent trading range around $64. This stock is now at a support level and since fundamentals remain strong, the stock should bounce back soon. Wellpoint could trade back up to the high-end of the recent trading range, which is around $75 per share in the coming weeks.
ConocoPhillips (COP) shares are trading well below the 52-week high which is $81.80. This stock fell from about $73 just before earnings were released, down to about $68.50 as investors were concerned about weaker than expected refining margins. However, the long-term fundamentals remain strong and earnings estimates are at $8.95 per share for 2012. The stock is also supported by a strong dividend at $2.64 per share which provides a 3.8% yield. ConocoPhillips plans to spin off its refining business in the next few months and this could take the shares back towards the high-end of the trading range, which is over $74 per share. This stock just started to bounce off the key support level of about $68.50 per share which has recently been a great entry point and the low-end of the recent trading range. The high-end of the recent trading range is about $74 per share.
The data is sourced from Yahoo Finance, Finviz, and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I am long WLP.