With all of the selling that has taken place in the global equity markets in recent months, it is a rarity to find a stock that hasn’t suffered a significant pullback. One company that has seemingly remained above the fray is Coca-Cola European Partners (NYSE: CCEP).
Looking at the daily chart for the stock we see that it has been moving steadily higher since late May, and a trend channel has formed to mark the highs and lows. The stock closed at $47.33 on Monday, but it is the $46 area that really got my attention.
The $46 range has three different forms of potential support all gathering in the same area. The area marked a temporary resistance point in September and it is common for former resistance levels to serve as support on any pullbacks. There is also potential support from the 50-day moving average which is at $46.06 presently, and there is the lower rail of the upwardly-sloped trend channel.
The overbought/oversold indicators are at similar levels to what we saw at the beginning of August. The 10-day RSI is low, but not in oversold territory. The daily stochastic readings reached oversold territory and then made a bullish crossover. From the August 2 low through the September 21 high, the stock gained +15.7%.
The fundamentals for Coca-Cola European Partners are somewhat mixed. The earnings growth has been in the average range with an average growth rate of 12% over the last three years. Sales have grown at a greater rate with the average annual rate of 30% over the same three-year period.
The return on equity is at 16.2% and the profit margin is at 12%. The stock is currently trading at a P/E ratio of only 18 and that is certainly attractive compared to how high some other ratios are currently.