Free Post: Value Stocks
AJRD looks like a great company that has just topped in wave ( 1 ) up
Aerojet Rocketdyne Holdings, Inc. designs, develops, manufactures, and sells aerospace and defense products and systems in the United States. The company operates in two segments, Aerospace and Defense, and Real Estate. The Aerospace and Defense segment offers aerospace and defense products and systems for the U.S. government.
Off 1.80 low in November 2008 AJRD played a textbook ( A )- ( B )- ( C ) fractal. It topped at 40.99 in February 2019. That was a wave ( 1 ) up. Both impulsive waves ( A ) and ( C ) have clear five wave micro structure. Wave ( C ) up has tagged a typical 114.6% extension of the wave ( A ) up. As soon as wave ( 1 ) up gets completed you should expect a corrective (A)-(B)-(C) down structure in wave ( 2 ) down. Wave ( 2 ) down may easily retrace 50%, 61.8%, 76.4% or even 85.4% of the preceding rally in wave ( 1 ) up. Moreover, the first leg down in subwave ( A ) of the wave ( 2 ) down may cut the price in half in a matter of months! Yes, the rally took 10 years but the first drop may get back half of it in 1 – 3 months! I would be interested to buy that stock for a bounce when it hits the first green target box under 24.70.
Now you think, well, its a great idea I may try to go long when we get there. Believe me, it’s not gonna happen. By the time we get there chances are you will lose a piece of paper where you have just hand written a note about buying AJRD. If you want to get reminded about that setup WHEN we get there subscribe to my “Bottoming Value Stocks” service. That would be MY JOB to keep watching it daily and let you know when we get there with a completed structure.
The company has attractive profitability ratios and does have a manageable debt. And it has an attractive valuation traded at only x12 Price-to-Free-Cash-Flow. I like its fundamentals but I totally do not like the technical picture (see above ). I love to buy good profitable companies like this one but at the right time when nobody wants it. The stock has been rallying hard for 10 years almost non-stop. It is time for it to cool down and we should patiently wait for it to happen.
Return on Capital