This week's four stocks caught my eye as potential new buy candidates based on the chart and the fundamentals. During most weeks, the most attractive stocks have something in common, whether it is similar sectors, charts, dividends, etc. This week, however, there is no clear connection between the top four.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.
Plum Creek Timber Company (NYSE:PCL) is a real estate investment trust that owns timberland in the United States and has lumber and fiberboard operations. The stock has not enjoyed the rally the overall market has experienced, though it is holding above support in the high $30's. PCL is attractive with its 4.3% dividend as well as the fundamental factors behind a potential rally. Typically, timber will do well during inflationary periods, which I believe are right around the corner. Another factor is the low correlation the stock has to the equity market.
Intel (Nasdaq:INTC) is one of the behemoths in the technology sector, and a leading semiconductor maker that has chips in devices around the world. The stock recently broke out to a multi-year high and has been consolidating after the rally. Technically, the stock is very attractive and the fundamentals are not far behind. With a price/earnings to growth (PEG ratio) of 0.96 the stock is considered undervalued versus many of its peers. And the 3.1% dividend for a technology stock makes it even more attractive.
OraSure Technologies (Nasdaq:OSUR) broke out to a new six-year high earlier this year, and has since pulled back to the breakout area near $10. The $500 million health care company is known for its HIV testing system as well as other tests to detect harmful diseases. There has been positive chatter around the company. However, any small cap health firm similar to OSUR will have above average risk for potential buyers. The key is to use the chart and buy near the $10 support, and put a stop-loss order in to protect against the stock breaking support.
Elizabeth Arden (Nasdaq:RDEN) has one of the better-looking charts in the market, an almost perfect uptrend. The beauty products company is involved in fragrances, cosmetics and skin care around the world. Along with the technicals, the fundamentals are solid as well. With an acceptable PEG ratio of 1.64 and a forward P/E ratio of 15.9, RDEN could be bought on a pullback to support. The $36 to $38 area should act as support for the stock and could be the next buying opportunity for the stock.
The Bottom Line
When adding new stocks to your portfolio, the key is to find companies that meet the themes that you believe in or have a momentum in the current market trend. Then, there has to be a strong chart and fundamentals behind them. But more importantly, the biggest factor is to use the charts to determine when to buy and what level will be the stop-loss in the event your analysis is incorrect. The four stocks above have pulled back to attractive support levels and that is the reason they made the cut and are featured.
For additional reading, check out 5 Must-Have Metrics For Value Investors.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.