One for the Long Haul

 | May 19, 2013 | 5:00 PM EDT  | Comments
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Stock quotes in this article:

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When the market has been soaring, it's tough to find a "high-flier" getting ready to take off. That's why, for the moment, I'll be focusing more on longer-term prospects than on shorter-term trades.

On Wednesday I shared my views on Nvidia (NVDA), a stock that has continued to climb into the weekend. But it's not the only one that has caught my eye in recent weeks. Another is St. Jude Medical (STJ), which deals in cardiovascular and implantable neurostimulation medical devices.

The stock pays a modest dividend of 2.14%, but its technicals are even more impressive.

St. Jude Medical (STJ) -- Monthly

Source: TradeStation

As you can see on the monthly chart above, St. Jude has been holding a long-term consolidation on the since 2006, with most action seen between $35 and $45. That, moreover, followed an extended uptrend that began in 2000 and continued into the early-2006 highs. Both the rally and the consolidation are great reasons to watch the stock, as they constitute one of the first steps toward a strong upside breakout.

St. Jude Medical (STJ) -- Daily

Source: TradeStation

Like the rest of the market, St. Jude has been on the move in recent weeks. Earlier this month -- after it stayed nestled in a smaller daily consolidation for a few months, between $40 and $43 -- the stock broke out to the upper portion of its monthly range. At this point, St. Jude is sitting at a strong daily resistance zone.

Granted, if we go by the daily chart, this is not the ideal time to splurge on an investment. But it is very promising that the recent breakout came on robust relative strength vs. other price swings within its monthly channel.

The early-2006 high is $54.75, and it may take a couple of years before we see that monthly channel break completely. Nevertheless, St. Jude's attractive yield and propensity for smooth trading make it one of my favorite stocks for the year ahead. I'll be watching it closely for new daily corrections to buy as for short-term swing trades while I continue to accumulate shares as a longer-term investment. My five-year target is $75 to $80.

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