Mueller Water Is Gushing Higher

by Sam Collins | August 6, 2013 4:15 am

Mueller Water Is Gushing Higher

Mueller Water Products (MWA[1]) makes just about anything that has to do with the transmission, purification, measurement and distribution of water. Its growth is directly related to new housing starts, which are on a sharp increase.

The company was recently listed as one of the top four small-cap stocks in the industrial equipment and components industry with the highest cash. BB&T Capital Markets notes MWA’s discount to the housing group and targets the stock at $8.50 over the next 12 months. On July 30, Mueller reported fiscal third-quarter earnings that increased net sales by 8.5% and operating income by 25.4%.

I first recommended MWA as one of the “Top 6 Stocks to Buy for July[2]” following a jump from a five-month consolidation on a breakaway gap that vaulted the stock from $6 to $7.75 in May. It retraced that breakout and following a CBR (proprietary indicator) buy signal, early in June, jumped almost $1.80 to $7.91. Last week it found support at its 50-day moving average at $7.25 and bounced to $8.02. Now, at under $7.62, MWA appears capable of breaking to a new high.

Note the strong MACD buy signal and the frequent pops of high-volume buying. I’m increasing our trading target to above $10 with a buy-under of $8. Long-term investors could benefit by holding this stock.

08062013 collins mwa buy 300x188 Mueller Water Is Gushing Higher
Click to Enlarge

chart key Mueller Water Is Gushing Higher[3]

Endnotes:
  1. MWA: http://studio-5.financialcontent.com/investplace/quote?Symbol=MWA
  2. Top 6 Stocks to Buy for July: http://investorplace.com/2013/07/top-stocks-to-buy-eght-clb-rdy-mwa-sbac-wcn/5/
  3. [Image]: http://investorplace.com/wp-content/uploads/2013/05/chart-key.gif

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