In his first "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer spoke with Michael McGarry, chairman, president and CEO of PPG Industries (PPG) , the paint and coatings maker.
McGarry said he's still optimistic for the future. There's a lot of latent demand that will need to be filled in 2022. While some of its customers expect continued weakness into the beginning of next year, many share his optimism for the back half of next year.
When asked about some of the challenges, McGarry explained that typically the automakers could provide them with a 90-day forecast that was 90% accurate and a 60-day forecast that was 98% accurate. In today's environment they struggle to predict what will happen next week. And it's not just autos, he added, appliances are the same way. They can't even predict traffic paint given raw material shortages.
PPG buys from a lot of different companies, McGarry continued. And if their paint is made from 20 ingredients, it only takes one to halt production. Between hurricanes, the Gulf Coast freeze, COVID and disruptions in China, it's going to be a difficult environment for a while.
Cramer said things will eventually turn positive for PPG, but investors can't afford to wait for that to happen, they need to invest now.
Let's look at the other half of the investing equation - the charts.
In this daily Japanese candlestick chart of PPG, below, we can see that prices have rallied this month and now trade above the 50-day and the 200-day moving averages. The 50-day line has a positive slope and the 200-day line is bottoming.
The On-Balance-Volume (OBV) line has been strong this month to confirm the price gains as buyers appear more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is bullish.
In this weekly candlestick chart of PPG, below, we see a positive picture. Prices made a bottom reversal of a bullish engulfing pattern at the end of September and the beginning of October. The weekly OBV line has turned up in October and the MACD oscillator is crossing upwards to a new buy signal.
In this daily Point and Figure chart of PPG, below, we see an upside price target of $211.
Bottom line strategy: The charts and indicators of PPG suggest we can see higher prices in the weeks ahead. Traders could go long PPG around $160 risking to $150. The $211 area is our price target for now.
