Conagra Brands Is a 'Healthy Choice' for Upside

 | Mar 01, 2017 | 1:57 PM EST
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cag

Conagra Brands (CAG) has been moving quietly higher in recent months. This maker of brands that include Reddi-wip, Healthy Choice, Slim Jim and Orville Redenbacher's, may not seem as sexy as the latest bio-tech play but the stock has nearly doubled in the past three years.

The charts and indicators still look bullish so let's check it out a bit closer.

In this daily chart of CAG, above, we can see the relatively steady climb in prices the past 12 months. There were two selloffs that broke below the rising 200-day moving average line -- one in September and again in November. In real time I would probably have not bought either of those two declines, but with hindsight things are a lot easier. From the mid-November low the technical setup has strengthened. Prices are above the rising 50-day and the 200-day moving averages. The On-Balance-Volume (OBV) has been trending higher since late September and recently made a new high confirming the new price highs.

The Moving Average Convergence Divergence (MACD) oscillator has been positive since early October.

This three-year weekly chart of CAG, above, is one you would want in your portfolio as it tracks higher with the rising 40-week moving average line. The weekly OBV line rises from 2014 to the middle of 2015 and then seems to level off. The weekly MACD oscillator has been above the zero line since 2014 and remains pointed up.

This Point and Figure chart of CAG, above, does not show a really bullish upside price target but I like it because it shows how durable the uptrend has been. Prices rally strongly and then have a consolidation pattern lasting several months and then break out on the upside again. Currently, this chart shows a $47 price target but I expect it will be overrun.

Bottom line: I would trade CAG from the long side or on any weakness toward $40 risking a close below $38.50.

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