In the following example we will demonstrate how we can trade a stock profitably using our trading strategy, based on fundamental indicators and metrics and recommendations given by research analysts. We will also use technical indicators to improve our decision making about the best time to buy or sell the stock.
The stock we will analyze and trade is Itron Inc. (ITRI).
Itron Inc. (ITRI) was purchased on April 4, 2024 for the price of $91.38 and sold on April 26, 2024 for the price of $95.95, before the earnings announcement, which occurred on May 2, 2024.
To purchase the stock we use CFD Trading with a leverage of 2:1. The profit obtained from the sale of Itron Inc. (ITRI) was 10%.
On May 3, 2024, Itron Inc. (ITRI) closed at $107.01. This great appreciation confirms our expectations regarding the great growth potential that Itron Inc. (ITRI) would have in the current quarter.
You can access more information about this company's earnings results at https://uk.finance.yahoo.com/news/earnings-beat-itron-inc-just-122630692.html.
Fundamental Indicators and Metrics
4.33B
4.51B
44.73
26.04
Price/Earnings-to-Growth (PEG)
1.04
1.99
3.30
Enterprise-Value-to-Revenue Multiple (EV/R)
2.08
Enterprise Multiple (EV/EBITDA)
23.56
4.46%
9.63%
31.97%
4.29%
7.79%
5.39%
2.17B
0.71B
226.91M
96.92M
0.38
Long-Term-Debt-to-Equity (D/E)
0.37
1.95
1.43
124.97M
87.51M
14.32
45.25
23.50%
64%
Earnings Per Share Estimate(Curr. Qtr.)
0.84
Sales Growth Estimate (Curr. Qtr.)
24.80%
Sales Growth Estimate (Curr. Year)
7.60%
Growth Estimate (Curr. Qtr.)
71.40%
Growth Estimate (Curr. Year)
7.10%
1.39
Research Analysts Recommendations
Research Analyst (1)
TD Cowen
Rating (1)
Outperform
Price Target (1)
$110
Potential Growth (1)
20.27%
Research Analyst (2)
Robert W. Baird
Rating (2)
Outperform
Price Target (2)
$108
Potential Growth (2)
18.08%
Research Analyst (3)
Canaccord Genuity
Rating (3)
Buy
Price Target (3)
$105
Potential Growth (3)
14.80%
In the information presented above, we can see that the values of fundamental indicators and metrics, as well as the recommendations of research analysts for the stock under analysis, are favorable. Therefore, we can assume that the stock has great growth potential for the current quarter and as such we will consider it eligible for trading.
Technical Analysis
Let's now use technical indicators to help us improve decision-making about the best time to buy or sell the stock.
We will use the Bollinger Bands® technical analysis tool and based on a Long-Term Trading strategy we will trade from the lower Bollinger Band to the upper Bollinger Band. We will use a daily chart to analyze the stock's price movement.
Note that it may occasionally happen that the values of some technical indicators are not strictly within the expected ranges. Considering that the difference between these values and the expected values is not very significant (in the context of the indicator we are analyzing), we can consider these values as acceptable to start our trading.
Buy Conditions (preferably all conditions should be satisfied or the deviation should not be very significant)
BUY PRICE: Is lower than the closing price on the day of the last earnings announcement
Buy Price = $91.38
Close Price (Last Earn) = $91.46
TRUE
Buy Price = $91.38
9 EMA = $90.63
TRUE
RSI: < 30 (Oversold)
RSI = 54
FALSE
1. K-Line and D-Line are rising
-> TRUE
2. K-Line and D-Line < 20 (Oversold)
-> K-Line = 45.6
-> D-Line = 38.4
-> FALSE
3. K-Line > D-Line (Uptrend)
-> TRUE
MACD:
1. Line and Signal Line are rising
-> TRUE
2. Line > Signal (Bullish)
-> Line = 0.47
-> Signal = 0.36
-> TRUE
OBV: A rising reflects positive volume pressure that can lead to higher prices
TRUE
1. BUY as close to the lower Bollinger Band as possible
-> Lower Band = $85.48
-> Buy Price = $91.38
-> TRUE
2. Set a conservative STOP LOSS below the lower band support level and adjust it as the price moves
-> Stop Loss Price = $82.00
-> TRUE
Sell Conditions (must be satisfied at least one condition)
SELL PRICE: Is higher than the closing price on the day of the last earnings announcement
Sell Price = $95.95
Close Price (Last Earn) = $91.46
TRUE
RSI: > 70 (Overbought)
RSI = 73
TRUE
1. K-Line and D-Line > 80 (Overbought)
-> K-Line = 80.5
-> D-Line = 84.8
-> TRUE
2. K-Line < D-Line (Downtrend)
-> TRUE
1. The upper band comes to represent the PRICE TARGET
-> Upper Band = $95.25
-> TRUE
2. SELL as close to the upper Bollinger Band as possible
-> Sell Price = $95.95
-> TRUE
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