In his second "Executive Decision" segment of Mad Money Tuesday evening, Jim Cramer checked in with Jim Foster, chairman, president and CEO of Charles River Laboratories Int'l. (CRL) , a stock that's up 37% over the past 12 months, including 9.8% Tuesday on strong earnings.
Foster explained that drug and biotech companies are growing like weeds and need laboratory services to help them bring new drugs to market faster. Charles River helps take a full year off of drug development time, saving billions of dollars.
When asked about China, Foster said that Charles River has a research facility in China and is helping to educate the Chinese on the research-led model that is working so well in the U.S. Let's check and see how the charts of CRL are working.
In this daily bar chart of CRL, below, we can see that the prices were in a strong condition before Tuesday's upside price gap. CRL was trading above the rising 50-day moving average line and above the rising 200-day moving average line. A bullish golden cross of the 50-day and 200-day averages can be seen in December.
The daily On-Balance-Volume (OBV) line has risen the past 12 months even as prices traded sideways from June to early November. The Moving Average Convergence Divergence (MACD) oscillator turned bullish in November and remains positive.
In this weekly bar chart of CRL, below, we can see that prices have nearly doubled in the past three years. Prices are firmly above the rising 40-week moving average line.
The weekly OBV line just made a new high for the move up to confirm and support the uptrend in price. The MACD oscillator is bullish and making its own new high for the move up.
In this daily Point and Figure chart of CRL, below, we can see Tuesday's price rally without the price gap. A potential upside price objective of $226 is being indicated.
Bottom line strategy: CRL has been in a strong technical trend for some time now. New highs just confirms the strength. Stay long or go long on a dip towards $173-$172 and risk a close below $165. The $226 area is our price target.
