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Stocks in popular 2020 COVID coins saw renewed interest on Tuesday after toilet paper maker Kimberly-Clark Corporation (KMB) released a better-than-expected quarterly report.
Key points to remember
- Kimberly-Clark beat street revenue and profit forecasts and raised its quarterly report dividend 6.5%.
- A revenue-driven business to burst on above-average volume in Kimberly-Clark shares can act as a catalyst for a comeback.
- The Clorox Company (160) the stock price broke out of a five-month course trend line to recover the closely watched 200 days simple moving average (SMA).
Kimberly-Clark, a 149-year-old household products company, reported fourth-quarter earnings of $1.69 per share, beating Wall Street forecasts of $1.61 per share. Revenue of $4.84 billion also topped the consensus mark and was up 5.7% from the year-ago quarter. About a year into the pandemic, the company’s consumer fabrics division continued to outperform, climbing 14% to $1.7 billion during the period.
Management also raised the company’s quarterly dividend by 6.5% to $1.14 per share and authorized a $5 billion payout. share buyback program. Looking ahead, the company anticipates solid revenue growth in 2021 of between 4% and 6%, with earnings per share (EPS) from $7.75 to $8.00. Through Monday’s close, Kimberly-Clark stock has a market capitalization of $46.28 billion, yields 3.24% and has been trading relatively flat year-to-date. Over the past 12 months, stocks have slipped about 5%.
From a technical standpoint, the stock price has been on a steady downward trend since it edged above $160 last summer. However, yesterday’s earnings-driven breakout on above-average volume could act as a catalyst for a return to the upside. Those buying here should consider booking profit at significant overhead levels at $145 and $154.50, where price finds resistance from the previous swing treble. Traders could protect their capital by placing a stop loss order just below the blue short-term downtrend line at $132.
A stop loss order is an order placed with a broker to buy or sell a security when it reaches a specific price. Stop-loss orders are designed to limit an investor’s loss on a position in a security.
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The Clorox Company (CLX)
Traders following the personal care group should also watch fellow pandemic games The Clorox Company, which rose on the back of upbeat earnings from Kimberly-Clark. The maker of CDC-recommended Clorox disinfectant wipes is expected to release its December quarter results on Feb. 4 before the opening bell. Analysts expect earnings of $1.69 per share, indicating a 16% improvement over the prior year.
Traders should also monitor a surprise profit, given that the company has exceeded Street’s expectations for the past six consecutive quarters. Since January 26, 2021, Clorox shares have a market value of $26.72 billion and is trading up 33.91% from a year ago while gaining 5% since the beginning of the month. Investors also receive a dividend yield of 2.19%.
The company’s stock price broke off a five-month trendline on Monday to recover the closely watched 200-day SMA. Additional buying pressure could trigger a short press as sellers rush to cover their positions, given that the stock has a short interest rate by 11.1%. Traders entering these levels should look for a retest of the 2020 high at $239.87 while managing downside risk with a stop order placed somewhere below the 50-day SMA. Remember to modify the stop orders at break even if the price climbs above the intermediate resistance at $220.
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The short Interest rate is a simple formula that divides the number of shares short in a stock by the stock average daily trading volume. Simply put, the ratio can help an investor know very quickly whether or not a stock is significantly short relative to its average daily trading volume.
Disclosure: The author held no position in the aforementioned titles at the time of publication.
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