Trade of the Day: E I Du Pont De Nemours And Co (DD) Stock

With the Dow merger coming in the future, now is the time to get into DD stock

By Sam Collins, InvestorPlace Chief Technical Analyst

E I Du Pont De Nemours and Co (NYSE:DD) — This widely diversified U.S manufacturer is not only the second-largest producer of chemicals but is also a major science and technology-based company.

Standard & Poor’s projects that the demand for agricultural products will have a large increase that will directly benefit DD’s global growth strategy, which includes a merger with Dow Chemical Co (NYSE:DOW). The merger, which is expected to yield $4 billion in synergies, pending approvals, is expected to be completed in August 2017.

The management of both companies is considering a possible post-merger “spin-off” into three separate companies, but no firm decision has been made on the proposal.

S&P increased their 12-month target by $2 to $90 and lifted their earnings per share for 2017 to $3.94 from $3.82. They cut their 2018 estimate by 4 cents to $4.25. Q1 EPS beat S&P’s estimate of $1.47, reporting $1.64. Higher operating margins were the focus of the positive quarterly result. DD shares pay an annual dividend of $1.52 for a yield of 2%.

DD stock is in a bull market despite a recent rounding top. That top appears to have been reversed yesterday when my CBR system flashed a buy signal exactly on the support line at $75.50. The line was constructed off of a series of daily highs in December 2016 and January 2017. High volume marks a broad period of accumulation that began in February when a breakout from a rectangle was preceded by a CBR buy signal off of the 200-day moving average (red line).

I believe that yesterday’s reversal marks an excellent opportunity for traders and investors to buy one of the world’s premier large-cap value companies at a reasonable discount. Thus, buy DD stock at $77 with a trading objective of $90.

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DD Stock Trade of the Day: E I Du Pont De Nemours And Co (DD) Has a Formula for Success

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