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High-Volume Breakout Makes This Stock an Immediate Buy

PBI broke cleanly through resistance on news of the sale of its management services business


Pitney Bowes (PBI) — Once known solely for its postage machines, this company now provides hardware, software and services to integrate physical and digital communications channels. For example, it recently helped turn one of North Florida’s largest commercial print and mail operations into a “White Paper Factory,” which no longer uses pre-printed forms and envelopes, saving the company $1 million a year.

Earnings are expected to improve from an estimated $1.70 this year to $1.75 next year. The stock has a dividend yield of 4.2%.

This stock was included on my Top 6 Stocks to Buy for October list, when I said, “PBI is trading at the top of a well-developed bull channel but could pull back to its 50-day moving average, now at $16.50. Buy PBI on a drop to its 50-day moving average or on a high-volume breakout through the resistance line at $18.50.”

On Tuesday, the company announced the completion of a $400-million sale of its management services business. It will use the proceeds to pay down debt.

Following the announcement, the stock broke cleanly through the resistance line at $18.50, closing at $18.93. PBI should be bought at the market with a trading objective of $23. It could also be purchased as a long-term hold.

PBI Chart
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