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Buy CNH on a Pullback

CNH gapped above its 50-day moving average and issued a strong buy signal


Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

CNH Global (NYSE:CNH) –This global manufacturer of agricultural and construction equipment is expected to earn $3.50 in 2011 versus $1.89 in 2010, and over $4 in 2012. The company is majority-owned by Fiat Industrial. Its brands include Case IH, New Holland, and Steyr. It also provides financial products and services, including retail loans, to global customers. It could substantially benefit from sales to Third-World countries in need of agricultural products since it has an established system of parts and service worldwide.

This company is on the “Buy List” of many institutional firms, and S&P recently increased its annual target from $55 to $63. And Moody’s recently increased its debt rating.

Despite the general market decline, CNH gapped above its 50-day moving average on Monday, and its stochastic issued a strong buy signal. Investors should buy CNH on pullbacks as a “cornerstone global investment.”

Technically, it could pull back and cover the recent gap at $37.29, but the trading target is $45, and the longer-term target is $55.


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