MRC Global Inc. (MRC - Get Rating) distributes pipes, valves, fittings, and related products and services to the energy industry. Products are often used in the construction, maintenance, repair, and overhaul of equipment used in extreme operating conditions.

MRC is benefiting from a strong presence across several end markets. Last year, MRC renewed several multiple-year contracts and was able to secure new contracts. Right now, its focus is on expanding market share, which should drive performance in the long run.

While the company only had $63 million in cash as of the most recent quarter, this compares favorably with short-term debt of only $1 million. However, the company’s net profit margin is 0%. In terms of growth, sales are down 20.8% over the past year, but analysts forecast revenues to rise 22.1% year over year in the current quarter.

Based on its forward P/E of 10.63, the stock appears underpriced. Its price-to-sales ratio of 0.3 is also low. The stock had been trending up since September, but has shown bearish momentum since May as shown in the chart below.

Take a look at the 1-year chart of MRC below with the added notations:

Chart of MRC provided by TradingView

While repeatedly running up against a trendline of resistance (red), MRC has also formed an important area of support at around $8 (green). The stock just hit that support last week and might now be making another run at the trendline.

Click Here to Read the Greatest Trading Book Ever Written

At some point, either $8 or the resistance will break. A long trade could be entered on a break above the trendline with a protective stop placed under the point of entry. However, if it were to break support, lower prices are expected and a short trade could be entered.

Want to Discover More Great Trades?

I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don’t work at all.

That is why I recently put together this special report to help investors focus on the only 5 chart patterns that matter…the ones that lead to the most timely and profitable stock trades. Click below to get your copy now!

5 WINNING Stock Chart Patterns

Have a good trading day!

Good luck!

Christian Tharp, CMT

@cmtstockcoach

MRC shares were trading at $8.23 per share on Monday morning, down $0.17 (-2.02%). Year-to-date, MRC has gained 24.13%, versus a 18.94% rise in the benchmark S&P 500 index during the same period.

About the Author: Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...

More Resources for the Stocks in this Article