Office Depot (ODP) — On May 19, S&P upgraded this stock from “hold” to “strong buy” and raised its 12-month target from $6 to $8. It also increased it 2014 earnings per share projection $0.04 to $0.15, saying it sees increased potential benefits from the merger with OfficeMax, including the closing of more than 400 stores by the end of 2016.
ODP broke from a bear channel on May 6 after blasting from a breakaway gap that sliced through both its 50-day and 200-day moving averages on very high volume. That was followed by a continuation gap in June.
The recent market adjustment resulted in a pullback in ODP near the bottom of a continuation gap at $5.23. This is an ideal place to enter a new position or add to a prior purchase.
On June 24, a golden cross (long-term buy signal) was triggered, and Thursday’s close was just one cent from the stock’s 50-day moving average. Buy ODP at the market with a trading target of $7.