Barron's highlighted Franklin Resources (BEN) on Saturday in a story titled "Too Cheap to Ignore." The author Andrew Bary points out that BEN has the lowest price-to-earnings ratio among the major asset managers. Earnings can get restated, so I have learned over the years to pay more attention to price from the marketplace, which never gets restated. Despite the fundamental reasons why BEN is cheap and should be bought, the chart shows a different story.
BEN made a large rounded-top formation and broke its long-term uptrend. The other asset managers mentioned in the story, like BlackRock (BLK), Invesco (IVZ), Janus Capital (JNS), Legg Mason (LM) and T. Rowe Price (TROW) have all made top formations. Prices of BEN are digging into the top end of a support area marked by the upper horizontal line near $40 in the chart above. With poor price action by the group and BEN digging into support, we are in no rush to catch a falling knife. Cheap stocks can get cheaper.
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