The Globe and Mail attempts to identify consumer discretionary
stocks with long-term upside
potential in it Friday edition. Guest columnists Ron Meisels and Monica Rizk write in The Globe's Number Cruncher column that they only considered stocks on the the S&P/TSX 60 Index. To find the most promising, they
looked at each stock's 40-week
moving average (40wMA), the average closing price for the
stock over a period of 40 weeks.
When stocks move above this average, investors often take profits, since
this usually leads to a price correction
toward the 40wMA. When stocks decline below this average, investors might bet on a recovery rally. Magna International ($124.18) and Tim Hortons ($66.91) are
trading significantly above their
40wMA, and therefore a minor
price correction may occur. At
the same time, Shaw Communications ($27.41) is closest to its average,
suggesting it is currently at a
favourable entry level.
Canadian Tire ($183) and
Thomson Reuters ($41.24) recently
completed a corrective move and
have started a new upleg. Gildan
Activewear ($63.20) is in the midst of
a minor correction toward its average
and therefore a better entry
point should appear at a slightly
lower level.
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