Traders should expect a strong move in shares of Renewable Energy Group Inc (REGI) soon, as a symmetrical triangle pattern has formed in its chart.
REGI is a producer and refiner of biofuels in the oil and gas industry. The company’s operations include acquiring feedstock, operating biorefineries, and marketing and distributing renewable fuels.
REGI’s clean fuel products are benefiting from government incentives and a demand shift towards cleaner energy. These trends led to stronger-than-expected earnings last month and should enable the company to continue to grow. Keep a close on REGI next week, as the stock reports its latest quarterly results on November 5th.
The company only has $34 million of long-term debt on its books compared to a cash balance of $328 million as of the end of the last quarter. REGI also has a current ratio of 2.9, indicating its current assets are much higher than its current liabilities. Its net profit margin of 21.5% is also a positive sign.
REGI saw strong revenue growth last year with sales up 22.6% year over year. Sales are expected to grow 9.5% next year and earnings are expected to increase 69.1%. The company’s stock is very undervalued with a P/E of 4.4 and an EV/EBITDA of 3.4.
The stock has seen bullish momentum over the mid and near term leading to a “Buy” rating in our POWR Ratings system. It holds a grade of “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade. The stock is also ranked #2 in the Energy – Services industry.
Take a look at the 1-year chart of Renewable REGI below with my added notations:
Chart of REGI provided by TradingView
You can see the symmetrical triangle pattern above (blue). As the support and resistance trendlines converge on each other, the pattern is created.
A trader could enter a long position on a break above the resistance trendline, with a stop set under the entry level. However, if the stock were to break below the trendline support, a short trade could be entered with a stop above the trendline.
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!
Have a good trading day!
Christian Tharpe, CMT
REGN shares were trading at $576.22 per share on Wednesday morning, down $6.30 (-1.08%). Year-to-date, REGN has gained 53.46%, versus a 4.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
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...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|REGN||Get Rating||Get Rating||Get Rating|