Part 6

Pfizer Inc. (PFE)

Company background and financial performance

Pfizer is one of the largest pharmaceutical companies in the world. Headquartered in New York City, US, Pfizer develops and produces medicines and vaccines for immunology, cardiology, oncology, endocrinology and neurology. The company has got several blockbuster products, each of them generating over $1 billion in annual revenues.

The company’s financial performance is currently been boosted further by the sales of its vaccine against COVID-19, which has proven to be very effective against the virus and that is expected to keep boosting its sales in the future as well.

Pfizer has been reporting strong financial results for a number of years now and the expectations for the upcoming Q2 results are quite high. Pfizer is announcing its earnings on the 28th of July and the expectations are for $0.96 per share while it delivered $0.78 per share for the same quarter of last year.

Should the earnings report come out better than expected or at least meeting analysts’ estimates, we would be expecting to see a bullish rally on the PFE stock that would give us a chance to maximize our profitability to the upside.


Technical analysis

By looking at the daily candles, one could see that PFE stock has been in a strong uptrend since March this year, bouncing from the $33 lows to reach the $40 highs in early June.

Since then, we have seen a bit of a profit-taking correction that has already sent the price towards the key support at $38-$39 where lots of buying pressure has been taking place every time the price tested that level in the past few months. Yet, the price has been failing to break that strong support level to the downside, motivating investors to take advantage of the recent profit-taking correction and buy the stock at a major support line ahead of the earnings report. Moreover, the 50-day moving average also matches with the support at that point, giving further bullish indications to follow up on.

Moreover, the RSI and Stochastics indicators have headed closer to the oversold territory, giving further bullish indications.
Overall, we remain bullish for the PFE stock ahead of the earnings report and would be looking to add it to our portfolio.


Chart: PFE

We would start buying PFE stock at the first support at $38-$39. Should the price drop further, we would be looking to add more to our buy positions at the next strong support at $37 where more buying pressure is expected and would give us a chance to further maximize our profitability to the upside afterwards. Our initial profit-taking target would be set at $42-$45, followed by the next target at $50-$52 where we would be fully cashing in our profits and waiting for another pullback on the price that would give us a chance to buy PFE stock again in the future.






Facebook Inc. (FB)

Our next stock pick from the SPY for July is Facebook Inc.

Company background and financial performance

Facebook is the largest social media platform with 3.3 billion customers worldwide.
The company has been showing rapidly growing sales and net profits for a long time now. In fact, its sales have tripled in between 2016 and 2020. The net profit of FB was up 57% in 2020 during the pandemic times. Facebook reported better than expected financial results in the past few quarters, which led to a further boost on its share price afterwards.
Actually, FB has been one of the best performing stocks during the COVID-19 pandemic.

The expectations for the upcoming Q2 results are positive. The company is expected to deliver its earnings on the 29th of July and the analysts’ estimates are for $3.3 per share, while it delivered $1.8 for the same quarter of last year. Any result above that figure would be seen as strongly bullish for the stock after the report and we would be potentially looking to add the stock to our portfolio at a decent support level ahead of the earnings report.

In fact, Facebook was among the best performing companies and stocks during the pandemic times. In other words, the social media giant further proved its huge brand awareness and great market positioning, reporting very strong financial results during that period of time and has become an even more must-own stock in one’s portfolio.


Technical analysis

By looking at the daily chart of FB, we see the massive uptrend that has taken place since the stock bottomed out from the $137 lows in March 2020 to reach the $357 highs in early July this year, representing a 160% return on the stock during that period of time. Quite an impressive rally, actually, meaning Facebook was one of the best performing stocks in the past year.

The price failed to break the resistance at $357-$360 and is now making a bit of a profit-taking correction that has already sent the price towards the current levels at $350. Yet, we believe the downside potential is limited because the price would soon get close to the major support line at $339 where lots of buying pressure is expected. In case it drops below that level it would be testing the next major support at $330 where investors and traders would be looking to buy the stock ahead of the earnings report and be able to further maximize their profitability to the upside. The RSI and Stochastics are heading down from the overbought territory, giving some indications for a potential further drop closer to the support marks we have just mentioned. Furthermore, the middle Bollinger band matches with the 20 day moving average and the key support at $339, giving further bullish indications. Based on the strong performance of FB during the pandemic and the great expectations for the future, we would like to buy the stock ahead of the earnings season and be able to maximize our profitability to the upside in case the company reports another strong result for the past quarter.


Chart: FB

We would wait for a bit of a further correction to the downside and start buying FB stock at around $342-$343, right above the $339 support. In case the price drops further in the short-term, we would be interested in buying more of the stock at around the next key support at $330. Our initial take profit target would be set at $360-$365, followed by the next target at $385-$390 where we would be fully cashing in our profits.




Sincerely,

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