An ascending triangle pattern has formed in the chart of ACCO Brands Corp (ACCO). If the resistance level at the top of the pattern is surpassed, a breakout could occur.
ACCO designs, manufactures, and markets consumer and business products. The company offers school notebooks, janitorial supplies, and whiteboards; storage and organization products, and computer accessories used in schools, homes, and businesses.
The company announced last year the acquisition of Power A, a video game peripheral manufacturer known for its MOGA line of controllers. This allows ACCO to pivot away from its traditional school and office products to higher growth offerings. Acquisitions have been a big part of its growth strategy.
ACCO had $86 million in cash as of the end of the last quarter, compared to $953 million in long-term debt. Though its current ratio of 1.6 indicates it has more than enough liquidity to handle short-term obligations.
While both sales and earnings were down over the past year, both are expected to rise in the quarter ending in March. The stock is also undervalued at its current price with a trailing P/E of 11.28 and a forward P/E of 7.82.
ACCO has shown medium term bullishness, but is down over the past few days. This has led to a “Buy” Rating in our POWR Ratings system. It is also reflected in the chart below.
Take a look at the 1-year chart of ACCO below with my added notations:
ACCO has hit the $9 resistance (red) on multiple occasions during the past several weeks. In addition, the stock started a trendline of support (green) at the beginning of December. Together, these two lines have formed an ascending triangle on ACCO. Eventually, the stock will have to break either the $9 resistance or the trendline of support.
A long trade could be made on a break above $9. Or a break below the trendline would be an opportunity to enter a short trade.
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ACCO shares were unchanged in premarket trading Wednesday. Year-to-date, ACCO has gained 3.31%, versus a 1.61% rise in the benchmark S&P 500 index during the same period.
About the Author: christian
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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