|Written by GSCR Staff|
|Thursday, 14 May 2015 07:04|
In Monday’s Guide we mentioned that we may be in for a rough ride for a while.
There was a great article in MarketWatch the other day that put a funny spin on it from the sports quotable icon, Yogi Berra. Here is the link.
All kidding aside this market may call for some short term trades with seasonal and or technical plays. Today’s stock features both.
Arctic Cat, Inc. (NASDAQ – ACAT - $32.51)designs, engineers, manufactures, and markets snowmobiles and all-terrain vehicles (ATVs), and recreational off-highway vehicles under the Arctic Cat brand name. It also provides related parts, garments, and accessories. The Company markets its products through a network of independent dealers in the United States, Canada, and Europe; and through distributors representing dealers in Europe, Russia, South America, the Middle East, Asia, and other international markets.
If we drew a template of a head and shoulders pattern over ACAT over the last five months, all indications are that we may be heading to a bottom. If we take the peaks of $38.48 and $39 February and April respectively as are head, and $37.25 as shoulder peak one, then we can roughly estimate that a neck line, or buying price, of $29.50 sometime in late May or early June.
From a fundamental standpoint, ACAT is attractive prospect with a PEG ratio of 2. The Company also had no debt as of December 31, 2014. Finally, Arctic offers a relatively healthy dividend currently yielding 1.4%.
Again, we think ACAT could be value here as a trade. Pulling the trigger somewhere from our head and shoulders calculation of $29.50 and the 52-week low of $26 could reap some short term profits. Knowing when to sell again will be the key. From a historical perspective it appears the periodic price swing average about five to six months.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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