A Real Growth Stock Idea

A Real Growth Stock Idea

October 16, 2017 Off By Chuck

As economic cycles are in their late stages, it is the energy, health care and materials sectors that typically outperform. Scanning hundreds of charts I see a number of very bullish setups especially in those areas, none more interesting than CF Industries, CF. This company is a major player in the nitrogen fertilizer market aiding farmers in growing their crops.

You can see in the shorter-term time frame daily chart below, price formed and recently broke out of an extended, deep, cup and handle pattern on large volume last Friday. With RSI momentum in the bullish zone and price above a rising 200 day moving average this is a very bullish setup.  What makes it so compelling is the depth of the cup base which provides the pattern target its 30% upside target.

When switching to a longer-term view, the weekly chart is just as interesting and more so as Friday’s close marked a breakout from an inverse head and shoulders reversal pattern. While the right shoulder is not as symmetrical to the left as I would prefer, the upside target is even more persuasive than the daily as it points to a 40+% gain.

With a breakout of bullish patterns on two time levels, barring any corporate hiccups and the market continuing its run higher, I find CF an extremely compelling opportunity as it is set up to lead the market with out-sized gains.