Allegheny Technologies Incorporated (NYSE:ATI) — ATI is a leading specialty metals producer for a variety of major end markets. Prime users include companies in the aerospace, chemicals and electrical energy industries.
Although revenues are projected to fall 15% in 2016, Standard & Poor’s expects 2017 to begin a long period of sustained growth for a major segment of ATI’s business, which will be partially offset by weak stainless steel markets and persistently high levels of low-cost imports. However, there are tailwinds in the future brought about by the suspension of its dividend, and a strong turnaround in profitability in 2017 that is forecast to be “driven by volume/price improvements and aggressive cost cuts.”
S&P estimates EPS of-95 cents this year and a gain of $1.10 next year, which they term “an inflection point in profitability and strong long-term growth potential …” Their 12-month price target is $22.
ATI has been consolidating for all of this year following a double-bottom reversal, which was flagged by my internal indicator, the CBR (Collins-Bollinger Reversal). The consolidation began in February and resulted in a sideways bullish channel with support at $13 and resistance at $19.
The 50- and 200-day moving averages mark the middle of the channel at $15.90 to $16.50.
Bullish support is indicated by above-average accumulation and a MACD indicator that is turning up. Buy ATI at $17.50 with a trading target of $22 for a proposed return of over 25%. Investors may also consider this mid-cap steel manufacturer for longer-term growth.