Up, down and all-around. It’s been a volatile period for a market under correction and one which may turn out to be an even uglier bear. The good news is — if you’re an investor that desires price volatility working for you rather than against you — Under Armour (NYSE:UAA), Chipotle (NYSE:CMG) and Tilray (NASDAQ:TLRY) are bear-busting stocks to buy today. Let me explain.
There’s always a bear market somewhere. But there are also stocks that have already endured those technical hardships and are readying for better days ahead.
Toss in decent, but not over-the-top short interest to help fuel the upside and the peace of mind that comes with owning brand recognition and a large-cap company—and the case for UAA, CMG and TLRY only grows stronger.
Stocks to Buy: Under Armour (UAA)
Click to Enlarge The first of our large-cap stocks to buy is Under Armour. The athletics gear and apparel manufacturer is a smallish large-cap stock that’s been on a tear in 2018. The price action follows a couple punishing years tied to pumped-up growth expectations getting rightfully deflated and more than a couple, now tidied up, company missteps along the way.
On the heels of five-month correction and a massive earnings win which confirmed UAA is making all the right moves off and on the price chart, it’s “game on” for bulls. Technically, Under Armour shares have formed a cup-and-handle base. That’s a bullish sign.
Thursday’s price action nearly derailed the pattern as the smaller price consolidation looked in jeopardy of failing. However, UAA stock reversed strongly back into the handle after forming a slightly lower low within the earnings gap.
There are no slam dunks in the market, but UAA looks good to buy today with a stop set 1% below Thursday’s new pivot low within the handle. That amounts to roughly $1.35 in risk compared to a conservative pattern breakout in Under Armour to $30 a share and more than $7.50 in profits.
Stocks to Buy: Chipotle (CMG)
Click to Enlarge Next on our list of large-cap, bear-busting stocks to buy is Chipotle. Much like UAA, Chipotle went through a period where the brand was tarnished. In CMG’s case, the company’s undoing was the result of food-borne, illness outbreaks. Bears would lead you to believe Chipotle will never be the same.
I agree, well kind of. I think this large-cap stock will actually wind up being even bigger and better through the lessons learned and continuing to serve the most delicious and healthy fresh-fast food on the market.
Most recently, a new bull market formed in 2018 received additional confirmation CMG stock is back on track following the company’s earnings beat and 9% sales growth for the third quarter under the stewardship of its new CEO. A pre-earnings corrective move down toward a test of the 200-day simple moving average received quick confirmation following the results that the bulls are in charge of this large-cap stock.
Chipotle shares rallied strongly over the course of the next two weeks before failing at the psychologically important $500 level and prior 1-year highs. Currently, a simple 3-day pullback pattern in CMG stock has emerged as a buying opportunity which affords bulls a way to position in a decidedly volatile stock with less risk.
For like-minded investors willing to look past a pooh-poohing analyst community and short interest of 9.5% in favor of improving trends off and on the price chart — buy this large-cap stock above $480. Complete the trade with an initial stop-loss of 4% and a first price target of $530 near 2018’s highs and enjoy a nice risk-to-reward play in CMG stock.
Stocks to Buy: Tilray (TLRY)
Click to Enlarge Tilray stock is not for the faint of heart. And it’s unlikely consuming the Canadian-based company’s cannabis, either medicinal or recreational, is going to have any kind of soothing effect. And off the price chart, the bottom line is this — anyone that thinks they can accurately figure out just how big this large-cap stock and the pot market can grow by, is probably sniffing glue.
What I like about TLRY is that it still maintains a capitalization just north of $10 billion despite having endured a massive correction. And with medicinal sales of $10 million and the recreational market just opening up, obviously, Tilray is not some fly-by-night outfit just looking to cash in on this growth market with no real prospects.
Another positive is TLRY has put together a decent amount of consolidation work to afford a new bullish trend that won’t go up in smoke like a less-convincing V-bottom might. However, as the pattern reflects a lower-low, which just breached the 78% retracement level, bulls need to respect the low as critical for exiting or risk potentially much larger losses.
For investors willing to dream a little dream while avoiding any rude awakenings, the suggested strategy would be to purchase a fresh five-day high above $120 in TLRY stock, set an initial stop-loss below $105 and begin trimming profits above $150. It’s our hope going long using this strategy will receive a ‘dope’ acknowledgment from bulls in a ‘job well done’ sort of way; versus the harsher alternative.
Investment accounts under Christopher Tyler’s management currently own positions in Under Armour (UAA) and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.