KO - K.O.?Looking for defensive large cap value names, KO is certainly something to look at. In the light of the massive (out)performance of growth over value the name is probably also not really a "flavor of the day". But with all the frenzy going on out there I don't mind to add a bit of "boring" these days...
KO was on my list for quite some time and after the recent pullback towards the $50 area I decided to give it a shot.
From a fundamental perspective the stock is not cheap compared to other consumer staples, however I like the stock offers a solid 3.3% div. yield. It's a household name with global exposure and a well diversified product offering. In short, a solid all weather stock, suitable for a long term holding.
Technically I use the recent pullback as entry level for the following reasons;
- $50 is a psychological and traded short resistance, turned support level that has held over the past 3 trading days
- The formation of a hammer, followed by a forming Doji on a higher low shows further confirms that buyers and sellers seem to balance out at this level and the slide has halted (for now)
- MACD is still a strongly negative signal, however it seems somewhat stretched and I expect a reversal around these levels
- RSI is week and points towards a positive reversal
- One could argue to spot an inverse pennant pattern, a per-se bearish sign. However, I would counter that the stock is not in an overall downtrend and therefore the pattern is not valid (yet).
Resistance on the climb back up is met pretty much in 1$ steps.
My trade
- Long @ $50
- SL @ $47
- Take profit @ $57.80
I might lift the TP and just let the stock run as a long term dividend play
***This is my personal view and does not represent investment advice. Risk management is key and do not risk what you can't afford to loose***
