Large Cap Portfolio 11/27

The stocks that look good on charts

Why VALE looks attractive at the current market price?

Dividend Yield: +9.34%
VALE is becoming a dominant player in the Electric Vehicle Supply chain.

Nickel sulfate is an essential ingredient for making lithium-ion batteries. Automakers are working with mining companies to secure access to battery metals like nickel, lithium, copper, and graphite as US and Canadian policymakers move to incentivize investment in domestically sourced materials.

Vale is already a direct supplier of nickel for Tesla batteries and has automaker Ford Motor Co. as one of its partners to jointly develop nickel resources in Indonesia. Value also signed a long-term supply agreement with General Motors just this month.

As you can see in the chart above, VALE stock sold off from levels of 15 (Point 1) but then never went below 12. It built a base and once again encountered resistance at 15 which converged with 200 dma. (Point 2). It is only this month the stock has broken past 15 with a Large candle and since then has quietly consolidated above 200 dma. Technically the stock is a buy with a stop loss below 14. 

Viatris VTRS – Turnaround Bullish Trend

Divided Yield: 4.3%

Very Low PE multiple

The company Viatris VTRS sells branded, generic, and biosimilar drugs. The popular cholesterol drug Lipitor is one of its key products. The company came into existence in 2020 following the combination of Mylan and Pfizer’s off-patent business, Upjohn. The company has been very consistent in paying quarterly dividends.

New Trigger: The company announced two acquisitions and stated its intent to aggressively grow the business. There was a big Gap up as a reaction (Point 4)

As you can see in the chart above, VTRS was in a strong downtrend. It formed resistance at 11.2 and then sold off to 8.5 (Point 1 to Point 2). It then started staging a turnaround with large candle moves (Point 3) and Gap up (Point 4). The stock seems to be doing all the right things and one can buy at CMP with a stop loss below 10.

United Microelectronics UMC – Playing the Taiwan Semiconductor space

Dividend Yield: +10.98%

Two +ve Triggers: 

• The company reported sales growth of 27%+ in October
• Warren Buffet made a big investment in Taiwan Semiconductor

As you can see in the chart above, UMC was trending down with 100 dma as resistance. But this month, the stock has made a Large Candle move. I would recommend buying between 6.6 and 7.2 with a stop loss below 6.1

Moving Average Turnaround in Nike

The World cup fever is going to help Nike post impressive numbers this year.

Nike has increased its dividend by 11% and now pays a quarterly dividend of $0.34 per share. The impressive part: this is the 21st consecutive year when Nike has raised the dividend. Here’s the best part: Nike just spends 34% of its profit on dividends. It means Nike will continue raising dividends.

One -ve: China’s zero covid policy. China has shut down major centers again on covid resurgence. Nike sees over 15% of sales from China

As you can see in the chart above, Nike stock has made a major recovery from October lows and is now trading above 100 dma. The sideways consolidation looks bullish and one can look to add the stock near 104 with a stop loss below 99.

Moving Average Turnaround – Toast

Toast TOST is a post covid growth stock. It provides a point-of-sale cloud-based solution for restaurants. The company is growing rapidly. Annual recurring revenue, gross payment volume, and ultimately revenue are up 60%, 53%, and 55%, respectively, over the past year.

On charts, the stock has moved past 100 dma and slowly and steadily building base at 100 dma. The stock can take off any time and hence offers great buying opportunity with stop loss below 16.

Current Portfolio

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers