VeriFone Systems, Inc. (PAY) provides point-of-sale devices for payments on purchasing goods and services. These devices are used at most brick-and-mortar retailers around the world. The company reports earnings after the closing bell on Thursday, March 8, with the stock below its 200-day simple moving average since Nov. 1, 2017, with this average now at $18.56. The stock closed Wednesday, March 7, at $17.97, up 1.5% year to date and just 3.9% below its Jan. 12 high of $18.70. The stock is 12.3% above its 2018 low of $16.00 set on Feb. 6.
In the longer term, VeriFone became an "option on survival" after the crash of 2008, when the stock traded as low as $2.31 in November 2008. I consider a stock trading between $1 and $3 per share as an "option on survival," as investors should allocate only funds they can afford to lose if the stock goes belly-up. This did not happen, and VeriFone shares traded as high as $58.88 in April 2011. The stock has been stuck below its 200-day simple moving average of $18.56 since Nov. 1 on the increase in online sales versus in-store sales.
Analysts expect VeriFone to post earnings per share of 16 cents when it reports results on Thursday. For the stock to have a strong reaction to earnings, the company must show gains globally on applications not tied to retail stores. (See also: VeriFone Stock: In-Store Shopping Should Help Recovery.)
The daily chart for VeriFone
The daily chart for VeriFone shows horizontal lines that are the Fibonacci retracement levels of the decline from the June 2015 high to the October 2016 low. Since this low, the stock as failed at its 23.6% retracement of $20.67, which was tested in February 2017 and again between Sept. 8 and Oct. 16, and the stock is now below its 200-day simple moving average of $18.56.
The weekly chart for VeriFone
The weekly chart for VeriFone is positive, with the stock above its five-week modified moving average of $17.59. The stock is well below its 200-week simple moving average of $25.71, which is the "reversion to the mean," last crossed during the week of Aug. 21, 2015, when the average was $32.53. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 42.63, up from 39.58 on March 2.
Given these charts and analysis, investors should buy VeriFone shares on a breakout above my monthly pivot of $18.47 and reduce holdings on strength to my semiannual risky level of $23.34. (For additional reading, check out: The Digital Wallet and the Future of Payments.)