The talented team at TheStreet's Real Money produced a list of 20 "Stressed Out" names comprised of companies with high debt. These stocks have rebounded smartly in recent weeks.
I used this list as a jumping off point to see if any of the names had more technical staying power and profit potential from here. Here are three names that made the cut.
Avon Products (AVP) has been bottoming since September. AVP has been trading above the flat 50-day moving average and has rallied to retest the 200-day average. The On-Balance-Volume (OBV) line has been going up since November, telling us that AVP buyers have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is rising smartly above the zero line for a strong buy signal. Put all these positives together, and AVP should be able to rally into the $6 to $7 area in the next few months.
Freeport-McMoRan (FCX) has had plenty of media attention. In this chart of FCX, above, we can see that prices made a lower low in January, but the OBV line made a bottom in August. The OBV line recently made a new high for the move up, and this could be leading the price action.
FCX is above the rising 50-day moving average and has been testing the 200-day average. The rising MACD oscillator is very bullish. FCX could extend its advance into the $15 to $20 area in the weeks ahead, if some temporary dollar weakness translates in some further strength into copper prices.
TimkenSteel (TMST) is our last candidate. In the chart above, one can see the price low in January and the subsequent recovery. Prices moved up and the OBV line moved up in tandem confirming the strength.
Prices are back above the 50-day moving average and the slope of this average is pointed up. The MACD oscillator is back above the zero line for a buy signal. TMST could extend its gains into the $15 to $20 area in the next couple of months.
