Casey's General Stores, Inc. (CASY) is a chain of pizza restaurants and convenience stores located in the Midwestern states and headquartered just outside of Des Moines, Iowa. The stock has been above a "golden cross" on its daily chart since Aug. 30 and has a positive weekly chart.
The stock closed Friday, June 7, at $133.90, up 4.5% year to date, and it is 9% above its 2019 low of $122.86 set on March 25. The stock set its all-time intraday high of $138.35 on Feb. 26.
Analysts expect Casey's to post earnings per share between 41 cents and 53 cents when it reports results after the closing bell on Monday, June 10. Earnings are projected to show a year-over-year decline but with higher revenue, which is the key metric. Fundamentally, the stock is overvalued with a P/E ratio of 25.07 and a dividend yield of just 0.87%, according to Macrotrends.
The daily chart for Casey's
The daily chart for Casey's shows the formation of a "golden cross" on Aug. 30, when the 50-day simple moving average rose above the 200-day simple moving average to indicate that higher prices would follow. The stock closed Aug. 30 at $112.99.
The close of $128.14 on Dec. 31 was an important input to my proprietary analytics, and its semiannual and annual risky levels at $142.45 and $151.43 are price targets above the all-time intraday high. The close of $128.77 on March 29 was another input to my analytics, and the second quarter value level is $122.89. The close of $129.08 on May 31 was the most recent input to my analytics, and my pivot for June is $130.09. The stock is above its 50-day and 200-day simple moving averages at $131.61 and $128.57, respectively.
The weekly chart for the Casey's
The weekly chart for Casey's is positive, with the stock above its five-week modified moving average at $131.91 and just above its 200-week simple moving average, or "reversion to the mean," at $116.74. The 12 x 3 x 3 weekly slow stochastic reading ended last week at 64.06, up from 61.33 on May 31.
Trading strategy: Buy Casey's shares weakness to the monthly and quarterly value levels at $130.09 and $122.89, respectively, and reduce holdings on strength to the semiannual and quarterly risky levels at $142.34 and $151.43, respectively.
How to use my value levels and risky levels: Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual, and annual closes. The first set of levels was based upon the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of each month. The quarterly level was changed at the end of March.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings was based upon backtesting many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.
The stochastic reading covers the last 12 weeks of highs, lows, and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading, and I found that the slow reading worked the best. The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.