Bruce Kamich has seen his fair share of good and bad stock markets. The veteran technical analyst has been evaluating charts professionally for over forty years. That means he's helped professional investors navigate plenty of bull and bear markets.
In April, Kamich's analysis led him to conclude that a new bull market was underway. Since then, he's evaluated the charts of hundreds of companies. However, few have caught his attention enough to warrant him selecting them as a member of his exclusive "best stocks to buy" list.
This Stock Could Be a Winner
Technical analysis provides insight into the aggregate sentiment of every investor, including top money managers, with resources available to them that individual investors can only dream about.
For this reason, charting price action allows investors to spot winning and losing stocks early on. Charts can also be used to calculate potential price targets, especially if you're a point-and-figure chart expert like Kamich.
Recently, he evaluated the chart of Jacobs Solutions (J) -) for clues as to what may happen next. Most investors may not know the engineering and construction stock, but that's not bad. The fact few investors are aware of Jacobs could mean it's under-owned, providing additional tailwinds that could lift its shares in the coming months.
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The company is a leader in helping governments and businesses execute complex projects, such as bridges, roads, factories, office buildings, and energy and environmental planning and remediation. That may put this industrials stock in the sweet spot of demand growth stemming from the billions of dollars in government spending associated with the Infrastructure Investment and Jobs Act.
Jacobs' revenue rose 6% to $4.1 billion in the first quarter, while its earnings increased by 5% to $1.81 per share. Despite economic uncertainty, Wall Street analysts expect Jacobs' earnings to increase 6% in 2023 to $7.34 per share and jump 14% year-over-year to $8.39 in 2024.
The Charts Say This Stock Is a Best Buy
A bullish outlook for earnings may be attracting the attention of big money managers, given what Kamich sees in its charts.
"The stock has been in a longer-term uptrend but has corrected lower for the past two years. Now looks like the time to get involved again," says Kamich. "I can see a large sideways price pattern for the stock price, but the indicators tell me a bullish story."
The indicators Kamich is talking about are on-balance volume and moving average convergence divergence (aka MACD). On-balance volume is a running total of up minus down day volume. MACD is a momentum indicator.
"Jacobs has only recently moved above the now rising 50-day moving average line and the rising 200-day moving average line. The shares have found buying interest around $112 and below but have not broken out over the highs in the $128-$130 area," writes Kamich. "The On-Balance-Volume (OBV) line shows gains from October. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line."
The bullish setup for Jacobs shares is compelling enough for Kamich to conclude, "I'm adding this under-the-radar name to my 'Best Ideas' stock list."
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How high could Jacob's share price climb? Based on daily and weekly point and figure charts, Kamich calculates targets of $159 and $191, up 30% and 56% from July 19.
