Jack in the Box Inc. : In oversold situation
October 25, 2012 at 07:10 pm IST
By
Entry price | Target | Stop-loss | Potential |
---|
US$25.41 |
US$0 |
US$23.9 |
-100% |
---|
In the past few sessions, Jack in the Box, the American fast-food restaurant shares have suffered from a sharp fall and is now coming back on significant level support.
From a fundamental viewpoint, the company seems undervalued relatively to its peers with a EV/Sales of 0.7. However, analysts have revised slightly downward their earnings forecasts. With an EPS estimated at USD 1.4 for this year and USD 1.59 for the next year, Jack in the Box is currently paid 18.18 and 16.01 times the results.
The security follows a downward trend in the short term, under the USD 27.3 resistance area. In the mid-term, the trend is neutral. Jack in the Box is not likely to continue its downtrend because it is near to the USD 25.5 level and it is oversold.
Therefore, the proximity of the USD 25.45 level is an opportunity to take a long position in Jack in the Box. The first goal is a return in the USD 27.3 ant then the 28.7 resistance area. A stop loss order can be placed under the level currently tested.
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