Jacobs Engineering Group Inc (NYSE:JEC) — This engineering, construction and maintenance company provides services to private industry and the federal government’s agencies on a global basis. I last reviewed JEC on Dec. 9 with a suggested buy under $61, but in retrospect I was early and the stock fell to an intraday low under $56 on Feb. 24.
The stock has a favorable basing pattern boosted by recent long-term field services contract from Chemours Co (NYSE:CC). It is the eighth field services agreement in two months as it increases its presence in North America. This was followed, on March 1, by the U.S. Marine Corps Special Operations Command Raiders at Camp Lejeune, N.C., issuing a contract to JEC with a potential value of over $39 million, which continues the long-standing successful relationship with U.S. government agencies.
Standard & Poor’s Capital IQ has a 12-month target price of $70, despite cutting their fiscal year 2018 (Sep.) estimate to $3.49 from $3.61. This cut was made prior to the Chemours and USMC contracts. Further, JEC beat the Capital IQ December quarterly consensus of 63 cents by 5 cents, and analysts expect an improving climate of infrastructure spending from the government that appears to make this stock undervalued at the current price.
JEC jumped from a consolidation pattern in November with a break-away gap, preceded by my internal indicator, the CBR buy. The breakout was accompanied by very high volume and evolved into a series of three step-up flags with a high at over $63.
From that top, a broad right triangle developed with support at $56 and further support at the 200-day moving average at $54.51. Traders should try to buy JEC at $56.50 with a trading target of $64. Long-term investors may find this large-cap growth stock a compelling purchase for a longer-term objective at over $70.
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