For his final "Executive Decision" segment of Mad Money Wednesday, Jim Cramer checked in Michael McGarry, chairman and CEO of PPG Industries (PPG) , the materials and coatings maker.
The company just posted a 31-cents-a-share earnings beat.
McGarry said that PPG continues making selective acquisitions that make sense. The company has completed six in just the past 18 months. He said many of these acquisitions have better returns than a simple share buyback.
PPG is in a lot of things you wouldn't think about, McGarry said. Their appliance business grew 14% in the past quarter, and sales are up in everything from electronic materials to kitchen bakeware. His company also has a strong military business which accounts for a third of PPG sales.
Finally, McGarry noted that electric vehicles are a huge opportunity for PPG. Battery boxes need paint, as well as adhesives and sealants, he said. They also require protective coatings, thermal gap fillers and other materials.
Cramer said PPG is a real company with real earnings and real growth.
In our last review of PPG back on January 20 we wrote that "Traders who are long PPG may want to raise their stop protection to $139, as weakness below $139 could precipitate further weakness." We would have been stopped out in February but PPG eventually rallied to new highs.
Let's check out the charts for a new strategy.
In this daily bar chart of PPG, below, we can see that prices gapped higher earlier this month and have continued to rise. Sometimes you see prices pullback a bit after a gap higher as some traders grab the quick profits. That was not the case with PPG as buyers have continued to push prices higher.
PPG is trading above the rising 50-day moving average line and the rising 200-day moving average line. Trading volume increased as prices broke out to new highs - investors are voting with their feet.
The On-Balance-Volume (OBV) has been gaining ground the past 12 months and has made its own new high to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In this weekly bar chart of PPG, below, we see a positive picture. Prices are in a longer-term uptrend and trading nicely above the rising 40-week moving average line.
The weekly OBV line shows improvement the last two months and the MACD oscillator just crossed to the upside for a fresh outright buy signal.
In this weekly Japanese candlestick chart of PPG, below, we see that in February there is a bottom reversal pattern (notice the doji and the confirmation?) to mark the end of the correction from January.
In this daily Point and Figure chart of PPG, below, we can see that the software is now projecting a potential upside price target in the $220 area.
In this weekly close only Point and Figure chart of PPG, below, we used a five box price filter. Here this chart shows the $216 as a potential price objective.
Bottom line strategy: Too bad we did not check out PPG in late February. Water under the bridge. Traders could still go long PPG at current levels, risking to $155 for now. The $216-$220 area is our price target.
