For his final "Executive Decision" segment of Mad Money Monday night, Jim Cramer checked in with Ernie Garcia, chairman and CEO of Carvana (CVNA) , the used car retailer.
Garcia explained that Carvana continues to build a great experience for their customers and is able to make more money per vehicle sold by vertically integrating their operations to cut costs.
Garcia added they use modern technology to give customers the best selection and price as well. The company's inspection and refurbishment centers make sure every car will delight its new owner and if not, Garcia said they offer a 7-day return policy.
When asked about competition, Garcia said their model isn't a secret. Carvana has spent eight years perfecting it and they come to work every day to make it even better.
Let's check out the charts as we kick the tires. We last looked at CVNA way back on April 16 and wrote that, "The $90-$110 area on CVNA looks like it could be significant resistance. While CVNA may have the right business model in this stay at home environment, I believe the macro headwinds of rising unemployment will dampen buyers enthusiasm for the stock. I look for a prolonged sideways trading range for the months ahead." CVNA only traded sideways until the end of May when uptrend was restarted.
In this updated daily bar chart of CVNA, below, we can see that prices have made a huge rally from their March nadir. Prices made a dramatic rise to early August and then the trend turned sideways to higher and two downward corrections unfolded. Prices are trading above the rising 50-day moving average line and above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has been moving sideways the past four months but now looks poised for renewed gains.
The Moving Average Convergence Divergence (MACD) oscillator turned up to a new buy signal last month.
In this weekly bar chart of CVNA, below, we see a bullish picture. Prices are in an uptrend and rallying firmly above the rising 40-week moving average line.
The weekly OBV line is strong and stands at a new all-time high to confirm and support the price gains.
The MACD oscillator just crossed upwards for a new buy signal.
In this daily Point and Figure chart of CVNA, below, we can see a potential upside price target in the $275 area.
Bottom line strategy: Aggressive traders could go long CVNA at current levels risking a close below $210 for now. The $275 area is our price target.
