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Trade of the Day: Buy the Gap in Jabil Circuit Inc. (JBL) Stock

Jabil Circuit, Inc. (NYSE:JBL) — This circuit-board maker supplies assemblies for international OEMs in the computing, peripheral and most other information technology and industrial markets. It has the distinction of possessing an unusual record of beating analysts’ trailing four-quarter average estimates over 41% of the time.

Zack’s reports that analysts, sensing this trend, have increased earnings estimates by 6.7% over the past four weeks. Yesterday featured the stock in its “Buy Now” report.

JBL is on an August 31 fiscal year. Standard & Poor’s estimates fiscal year 2016 earnings at $1.32 and forecasted EPS of $2.04 in FY 2017 and $2.34 in FY 2018. The company beat Capital IQ’s Aug-Q earnings estimate by 4 cents. Its largest customer is Apple Inc. (NASDAQ:AAPL), which accounts for about 24% of its total sales. The remainder of its sales are in healthcare, packaging, and other industries that require IT circuit boards.

Technically, JBL is in an intermediate uptrend supported by a golden-cross (long-term) buy signal in August. In September, following a jump to almost $24, S&P recommended profit-taking, noting that the stock had a run-up of over 20% since June.

Sellers opened a gap-down from $23.43 to $22.79. Gaps of this nature almost become magnets for buyers and eventually lead to new highs, thus our target for a trade in the resistance line just above the September high.

The stock is supported by On-Balance-Buying and a MACD indicator that is arching up. Buy JBL stock at $21.75 with a target of $24.50 for a proposed trading gain of over 12% before December 31.

JBL B21.75 T24.50
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