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.
On May 27, Goldman Sachs (GS) upgraded shares to “buy” with a price target of $7, which was also my trading target when I recommended the stock on May 20 and June 17.
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.
