Hello all, and welcome to 2022! A long time reader of OmahaCharts recently brought to my attention that I rarely blog about individual stocks anymore. In the old days, this site catered more to traders. In the old days I myself was more of a “trader.” My transition into portfolio management via my duties at JSPM LLC certainly slowed much of my own individual trading as I spend my days managing client portfolios now. Pair that with the incessant questioning that comes from blogging about a trade I am getting into and you would get burnt out too. Questions like, “Are you still holding that stock?” to “Why is this down today?” are beyond my bandwidth these days. That being said, I think there is some value to talking about individual stocks and going forward my plan is to point out some individual setups that catch my attention. In addition, it might be a good exercise to look back and see how these setups pan out after several months, or years have passed.
Toward the end of these posts as always you will find a disclaimer. Those are there for a reason, and I will reiterate that individual stock selection carries risk. If you take any of these stocks as a trade, know your risk/reward levels. If you are adding them as part of a portfolio, you have even more work to do. Knowing how a particular stock affects overall portfolio beta and volatility is important. Perhaps most important is understanding position sizing (Kelly Criterion for asset allocation) is a good place to start. Now that the housekeeping is out of the way, let’s take a look at this week’s stock spotlight, West Pharmaceuticals.
West Pharmaceutical Services, Inc. is a designer and manufacturer of injectable pharmaceutical packaging and delivery systems. It checks the majority of the boxes from a fundamental perspective. Strong sales and EPS growth, increasing institutional sponsorship, strong ROE, heavily cash flow positive, and firm earnings stability. West $WST spent the majority of Q2 and Q3 2021 in a strong accumulation phase before consolidating gains in September through year end. The technical setup at these levels is one we watch for. A breakout above all time highs roughly $6 higher on strong volume should ignite a new leg higher:
Near term price targets to watch for are $525, $550 and $600. The company reports earnings on February 17th. As a company in the medial supply group, $WST and its counterparts should see continued strength from a demographic and industry standpoint.
If your portfolio is in need of a steady healthcare name, West Pharmaceuticals warrants a look.
I am looking to take a position in the coming week.
Let’s get 2022 off to a great start!
Trent J. Smalley, CMT
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JSPM LLC, its clients and or advisors may currently have a position in West Pharmaceuticals.