Great Upside for Great Lakes Dredge & Dock

by Greg Harmon | January 4, 2013 1:30 pm

[1]Editor’s note: This column is part of our “Best Stocks for 2013″ series; stay tuned for more entrants today and Monday.

The economy is starting to grow again, and that is good for every company in the U.S. They all have a tailwind now. This effect is starting to show up in the equity indices as they begin to move to new higher highs, supplemented with the view that uncertainty about political wrangling will dissipate sometime soon.

There will be winners and losers along the way. One place to look for winners is in the shipping sector, but maybe not where you would expect.

With the Mississippi River at record low levels, barge traffic is facing concerns. And one company, Great Lakes Dredge & Dock (NASDAQ:GLDD[2]) based in Oak Brook, Ill., is already cashing in on projects up and down Old Man River.

With the added boost of a growing economy and financial clarity with producers looking to ship, there stands to be more need for their services. Some of this upside has already been reflected in the stock price. You might think that picking this name as the winner in 2013 is crazy after its climb of more than 60% in 2012. But the technicals support a much greater move. Take a look.

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The daily chart shows a rising channel that is reaching the midline between the Lower Median Line and the Median Line of the Andrew’s Pitchfork. In the middle, it could be attracted to either Median Line — but what’s important is that the Pitchfork is running higher with no sense of any impending test of its support lower. The trend is higher.

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And the longer views from the weekly and monthly charts look even better. The weekly chart is showing a break above the four-year-long consolidation channel between $4.00 and $8.60. It’s natural that it will consolidate as it breaks above this channel, as it did in late December. The target for the break of the channel is a move to $13.20.

Got your attention now?

And look at the Relative Strength Index (RSI). This measure of the strength of the move is solidly in bullish territory and rising, supporting a continued move higher. The Moving Average Convergence Divergence histogram (MACD) is also positive and growing, adding weight to the bullish case.

But the picture gets better.

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Moving out to the monthly view shows that it broke an ascending triangle in November and consolidated that breakout in December. The target from the triangle break is a move higher to $14.30. The RSI and MACD on this timeframe also support a move higher. And a quick look at the accumulation/distribution line shows it strong and at highs. Finally, a glance at the 3-box reversal Point and Figure chart, where time does not matter, shows a price objective of 19.25 on a double top breakout.

Will there be a retest of the breakout levels between $8.30 and $8.60? Probably, but the potential for upside is not to be ignored. Oh, and for those of you who do not believe in the voodoo of technical analysis, the few fundamental analysts that follow it are bullish. At least they were a year ago. So it is underfollowed as well. Another plus.

Put it all together and you have plenty of reasons for continued growth in 2013.

Source URL: https://investorplace.com/2013/01/great-upside-for-great-lakes-dock-dredge/

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