With the way tech stocks have been moving recently, you’re probably wondering why the heck I would bring up a building materials company as the Trade of the Day. Well, let’s talk about that.
Jeld-Wen Holding Inc (NYSE:JELD) is not a household name, and it’s not in a fancy sector either. It’s a building materials company that focuses on doors and windows. But it’s got all three things I look for – a technical buy signal, solid fundamentals and a strong trend behind it – and that makes it too interesting to ignore.
If you are a member of NexGen Investor or NexGen Trader or have seen me at investing conferences or on television, you probably know that I have had great success with the relative strength index (RSI) as a buy indicator. The RSI measures a stock against itself, and it consists of a scale from 0 to 100. Anything below 30 means the stock is oversold, and when the stock crosses above 30 it creates what we call a crossover buy signal. That’s what we’re getting with JELD.
Look at the bottom of the chart above and you can see that the last few times JELD flashed the RSI crossover buy signal the stock went on to rally. I’ve circled the one that is just now taking place on the right side. The last crossover took the stock to a new all-time high, and in the pullback that has followed, it has found solid price support just above $30 (the black line). It has bounced from around that level three times now, forming somewhat of a triple bottom, which is another buy signal.
In addition to the technical set-up, there are also outstanding fundamentals behind this stock. Earnings are expected to grow from under $1 a share last year to $1.68 this year, continuing to more than $3 by 2020.
And lastly, I want to see what I call an intangible – a catalyst to light a fire under the stock. In this case, the housing market is our intangible. The latest numbers from May showed the third best month for sales in the last 10 years and the median home price at an all-time high. Millennials are buying more homes, and with more homes you need… guess what?…doors and windows. That makes JELD an excellent secondary play on a big NexGen theme.
So we have a strong chart, fundamentals and trend, giving us the trading trifecta we look for. The last couple of days have brought JELD back down closer to support, creating an even stronger entry point.
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Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.