Saturday, January 21, 2012

Buy Supervalu Inc (SVU) for a 20% Profit - January 21,2012

Above Picture has been modified from the Original Picture to make it look more interesting in my Blog and to better suit the title for this post.

Today I am recommending a buy on Supervalu Inc (SVU) for a 20% profit. Even though I am recommending a buy on SVU, but I didn't recommend to buy now. As I believe SVU will tumble a little more before we should plan our entry.

Based on the long term chart above, even though some might argue that SVU is a dying stock with falling revenue from year to year, however, the chances of making good money on this stock is also available. As you can see on the above long term chart for SVU, I have sketches on the percentage profit opportunity for every downturn movement on this stock. If you plan your entry correctly and wisely after every downward move, you will be able to make a percentage profit gain ranging from 15% to 50%.
Therefore timing the perfect entry is very important in order to make good money for this stock.

Based on the short term chart for Supervalu, the 2 important technical indicators are showing bearish signal and more downward move for Supervalu. Supervalu has recently experiencing a sharp downward move from $8.4 level to the current level of $6.9 which is around 20% drop. However, based on the recent candlestick move (bearish engulfing pattern), it shows that SVU is still very bearish and may be heading to test the all time low at $6.3. Based on the analysis for the short term chart, the perfect entry will be the long time support at $6.3 level.

Based on the quarterly earning, SVU does show a reduction in earning from the previous years quarter compare to the recent quarters. However, signs are pointing that SVU earning is currently stabilizing and chances of improving is higher.

The recent sudden furious dropped in SVU stock price is mainly due to the goodwill and intangible asset impairment charges which resulted on expected loss of $2.58 to $2.48. Well, my opinion is this goodwill and intangible asset impairment charges is not a big deal for me as SVU is still profitable and also maintaining a good healthy dividend payout.

Disclosure: I did not hold any stock in SVU but may plan my entry in the next couple of days when the price is right.

3 comments:

  1. Anybody buying supervalu or have already bought supervalu?

    ReplyDelete
  2. I am looking at this stock, however, a lot of issues..

    I spoke with a manager, at our local Cub market and he indicated that the Cub chain was doing fine, but not the rest of their brands were struggling...

    Very interesting earning chart you posted...It does little to boost confidence in this once excellent company...

    Many newly installed COEs offer little other than to engage in M&As, in order to grow the company...It is all to often a roll-of-the-dice and leads to failure...

    Another Cub manager at a different location, suggested that their new leader (COE, for WallMart) has only reduce selections and increased prices!

    Another long term issue, is its unionized labor force, as Super Value, through third parties, have been staging "community activists protests" against large box stores, particularly WallyMart...

    Has management even issued a turn-a-round plan? If not, this company maybe destine to fail, much like others before it...

    ReplyDelete
  3. I can see the argument for buy at 6.3 based on the charts. But, would we be catching the proverbial "falling kn ife" at that point, i.e. it would go even lower. I see the chart rationale, but what Hans above says also makes me a bit nervous. Tough call.

    ReplyDelete

Related Posts Plugin for WordPress, Blogger...