For his final "Executive Decision" segment of Thursday's Mad Money program, Jim Cramer checked in with Sean Connolly, president and CEO of Conagra Brands (CAG) , which just posted a four-cents-a-share earnings miss, but forecast 3% organic sales growth in 2022.
Connolly explained that inflation has been more persistent than originally expected and it's been a challenging environment overall for its supply chain. Those pressures should moderate during this year however, and that's why he remains bullish going into 2022.
Part of Conagra's success has been focusing on consumers and innovating with new products that consumers love. Younger consumers are cooking more at home, he noted, and Conagra is giving them items in the frozen food aisle and in snacking, the two hottest categories at the moment.
Let's check out the charts and indicators before I start to think about snacking in between meals. In our last review of CAG on October 4 we wrote that "Traders could go long at current levels risking to $32.50. $39 and then $50 are our price targets."
In this daily bar chart of CAG, below, we can see that prices continued lower from early October into early December and our recommended stop at $32.50 was elected. Prices have rebounded in December but have so far stopped at the underside of the declining 200-day moving average line.
Prices are above the rising 50-day moving average but the On-Balance-Volume (OBV) line has turned lower telling us that sellers of CAG have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has narrowed and is poised to turn lower for a take profit sell signal.
In this weekly Japanese candlestick chart of CAG, below, we can see that prices are below a declining 40-week moving average line. The latest weekly candle shows both an upper shadow and a lower shadow indicating a balance of sorts.
The weekly OBV line has been drifting lower since May and that suggests some amount of liquidation (selling). The MACD oscillator has crossed to a cover shorts buy signal but that may not last too long.
In this daily Point and Figure chart of CAG, below, we can see a downside price target in the $24 area.
Bottom line strategy: The charts and indicators of CAG are not compelling enough to recommend a new long position. Avoid it for now but we may want to come back in several weeks.