Trade of the Day: Breakout in LNC Stock Targets a 14% Run

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Lincoln National Corporation (NYSE:LNC) — This financial company offers annuities, life insurance, disability and dental insurance, employer-sponsored retirement plans, savings plans, and financial planning and advisory services.

Lincoln National has a record of steady earnings growth. In 2012, the company reported EPS of $4.47, up from $0.95 in 2011. For 2013, it reported $4.52, and in 2014, earnings came in at $5.62. S&P Capital IQ estimates earnings of $6.07 in 2015 and $6.72 in 2016. Its analysts have a “buy” rating on LNC stock, and on April 30, they raised their 12-month price target by $3 to $65, which is a mere 9.7 times their 2016 earnings estimate.

Capital IQ notes Lincoln National’s ability to improve its balance sheet strength and financial position compared with its peers. Its analysts consider LNC stock to be in the low-risk category despite exposure to the equity markets. Higher interest rates would also benefit Lincoln National.

LNC stock is in a long-term uptrend. In the past four months, it consolidated in a trading rectangle following a jump from a low just above $45 in October to a high above $58 in December.

Until Friday, the range of the consolidation was $56.30 to $58.75, but a breakout from a complex quadruple-top, as well as a break of the 50-day moving average at about $57.80, has set a new target of $67.

Buy LNC stock at its breakout point of $58.75 for a potential 14% return. Traders may want to place a stop-loss order at $55.

LNC stock should also be considered an investment-grade stock in the financial sector. Long-term investors can place a target at $80, which is more than 35% above the breakout point.

LNC Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/lincoln-national-corporation-lnc-stock-trade-of-the-day/.

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