Herbalife Ltd. : A rebound in sight
Entry price | Target | Stop-loss | Potential |
---|
$31.33 |
$0 |
$28.95 |
-100% |
---|
Herbalife shares seems oversold close to the USD 29.7 support that is likely to allow a rebound.
The stock seems very attractive currently with an extremely low valuation: the P/E ratio for 2015 is valued at 6.11x. The company profitability is increasingly strong with a net margin expected to grow from 6.36% to 9.14% between 2014 and 2015, while EPS should rise from 3.49 to 5.13 USD. The average target price set by analysts who are covering the stock represents a huge gain potential of 84%, which stands as a significant argument for buying the share.
Technically, prices evolve in a bearish trend. However, the proximity from the USD 29.7 support and the downward trendline gives credit to a potential technical rebound. Thus, the stock could find new energy and would rise towards the next USD 34.25 resistance.
Therefore, it would be opportune to open a long position on the stock to benefit from a return to USD 34.25. Nevertheless, this trading strategy will require a stop loss below USD 29.7.
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