For Virgin Galactic Holdings (NYSE:SPCE) shares, rocket-like action off a big-time bottom has been replaced by modest profit-taking. But rather than believe SPCE stock is facing a “Houston, we have a problem” scenario, investors should be taking a trip in shares at advantageous prices both off and on the price chart. Let me explain.
It has been a few glorious weeks for investors riding the broader market higher from a meaningful intermediate-term bottom. Shares of the S&P 500 and NASDAQ Composite are up roughly 30%. Shareholders in large-cap heavyweights from Apple (NASDAQ:AAPL) to Yum Brands (NYSE:YUM) are also breathing a lot easier these days. Unsurprisingly, the ride in space tourism upstart and mid-cap growth stock Virgin Galactic has proven to be a large beneficiary of the positive swing in investor sentiment.
As a reminder, as the indices were making a bit of history with speedy bear market losses of around 35%, the over-the-top panicked environment resulted in SPCE stock crashing nearly 80%. The massive decline also nearly scuttled Virgin’s entire five-fold gain to record highs established over the prior three months. Four weeks off its corrective low, shares have rallied just over 100%. That’s more than three-fold the gains in the broader market.
SPCE Stock Looking Forward
Okay, so what about tomorrow? Looking further past the novel coronavirus, for the next generation of investors wanting to ride one of the market’s next potential, big thematic waves, SPCE stock is still a speculative play worth a small portfolio allocation. And don’t just take my word on Virgin Galactic, either.
The fact is, Virgin Galactic is a first-mover in today’s race to space. Its first commercial passenger launch is expected later this year with founder Richard Branson buckling up. From there CEO Chamath Hedosophia forecasts the outfit can be profitable by 2021. Some of Virgin’s more than $80 million advance sales will begin hopping on board for the 90-minute joyride to the edge of the Earth’s atmosphere.
Need more confirmation? InvestorPlace’s Louis Navellier sees big future profits for today’s SPCE stock investors as well. Right now his Portfolio Grader ranks Virgin Galactic with a ‘B’ and a buy recommendation.
To be fair, SPCE stock is not your grandpop’s blue-chip investment. It’s also not for investors that are faint of heart. As indicated, shares are volatile. And that dizzying price tendency isn’t likely to ease anytime soon.
Still, as with other past market disruptors in their early-going such as Amazon (NASDAQ:AMZN) or Netflix (NASDAQ:NFLX), Virgin Galactic has a lot going for it. Right now that optimism is also finding an ally on the weekly price chart.
SPCE Stock Weekly Chart
Source: Charts by TradingView
On its way to gaining more than 100% from its bear market bottom, SPCE stock’s volatility has also proven very constructive. Technically, the rally has produced a sustainable-looking uptrend with its series of higher highs and higher lows now entering its fifth week. Coupled with its manageable angle of ascent and stochastics generating an oversold bullish crossover, the case for buying Virgin Galactic looks good.
For investors agreeable with our bullish outlook, purchasing shares today could yield profits in excess of 50% over the next couple months. That’s predicated on SPCE stock’s uptrend more or less keeping its shape.
If correct, a rally of this size would lead to shares challenging the 62% retracement level near $30. I’d keep the test as a first target for taking partial profits. To avoid any potential ‘Houston, we have a problem’ threats that could turn more ominous, aborting the position below intersecting support lines near $15 also makes abundant sense off and on the price chart.
Investment accounts under Christopher Tyler’s management do not currently own positions in 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 market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.