Carpenter Technology Corporation (NYSE:CRS) — This specialty steel company produces and distributes stainless steel, titanium alloys, and super alloys to the aerospace and oil and gas industries, and they supply various stainless steels to the medical industry for specialty instrument manufacture.
CRS is expected to benefit from the acquisition of Puris LLC, providing entry into the rapidly expanding titanium powder market. Despite a projected 1% decline in sales in fiscal year 2017 (June), because of order delays in aerospace products, Standard & Poor’s expects a strong rebound in sales in FY 18 by about 15%. On February 3 S&P upgraded CRS from “hold” to “buy” and raised their 12-month target to $50 from $34 per share. They also raised their FY 2017 earnings per share estimate to 80 cents, up 20 cents, and kept their FY 2018 estimate at $2. For the December quarter, CRS reported earnings that were 10 cents above the Capital IQ consensus and beat revenue estimates by 3.4%.
This steel company topped at over $65 in April 2014, finally making a low at $25 in January 2015. The bull channel’s support line is drawn from the close at that bottom.
The stock is volatile, trading a seven-point range from support to resistance almost every six weeks. This is a benefit to traders who are nimble enough to grab CRS close to its support line, and that is where it is now. Therefore, buy CRS at $38 or lower for a trade to $45 for a proposed return of over 18%.
Investors may wish to examine this company as a potential long-term investment due to its entry into the high-growth titanium powder market.
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