I'm not going to lie: Barnes & Noble Education (BNED) has looked awful, but get past that here. This is my preferred side of the spinoff from Barnes & Noble (BKS). The companies have only reported one quarter apart and BNED put in a profitable quarter at that. The stock isn't cheap, but with a solid stockpile of cash and no debt along with a 5% short interest and 70% institutional ownership, it looks like an attractive play as a small position in a growth portfolio.
The company focuses on online platforms for education as well as college bookstores. While some schools are getting more digital, the transition is going to be a slow one and BNED should have time to transition along with professors and students.
The company's December quarter created a huge gap on the chart, but now bulls look poised to push the stock into the gap. A move over $11 pushes BNED into the gap and targets a fill to $13 here. The trend has been strong since the start of 2016 as shown by the MACD, but now we have a push in the Commodity Channel Index (CCI) setting up for a possible big push in the short-term trend. This is a setup lending credence to the thesis of a gap fill. The Force Index is still a bit skewed by the big December drop, but we are seeing a positive push here. I'd keep an eye on the $11 mark plus the Relative Strength Index (RSI) here as I want to see pushes over recent highs.
I'm a buyer here with a stop on a close under the $10 area. More aggressive traders may want to give the stock all the way to the $9 area, but this is a higher-risk name here, so I don't want to let volatility and downside action get on top of me. Overall, I'm targeting $12.50 as the first profit area since I expect resistance at the gap fill area, but I wouldn't discount the possibility of this one returning to the $15 area over the next 12-18 months.