In his second "Executive Decision" segment on Mad Money Tuesday night, Jim Cramer also sat down with Melissa Smith, CEO of Wex (WEX) , the corporate payments processor with shares that are up 52% for the year.
Smith explained that companies like Expedia (EXPE) that can't afford to manage the tens of thousands of payments from customers to hotels and airlines, so then WEX handles those payments on their behalf, providing both technology and payment processing. WEX also has a fuel-related business that uses a mobile app to speed transactions and eliminate fraud for corporate fleet vehicles.
On the consumer side of their business, WEX handles virtual card payments for applications like flexible medical spending accounts, ensuring that purchases qualify for those special-use functions. Let's check out the charts to round out the discussion.
In this daily bar chart of WEX, below, we can see that prices corrected to the downside in the fourth quarter of 2018 but they have come "roaring" back and made new highs for the move up in April and again this month.
WEX is above the rising 50-day moving average line and the slowing advancing 200-day line. In early April we can see the 50-day average cross above the slower-to-react 200-day line for what is commonly called a golden cross. In a strongly trending market this belated buy signal can be a successful technical tool.
The trading volume looks like it has been declining from January but the On-Balance-Volume (OBV) line shows a steady rise this year and confirms the price gains.
In the lower panel is the 12-day price momentum indicator which shows a small bearish divergence from June into July with lower momentum peaks when prices made higher highs. This small divergence may not have much of an impact on prices, but we'll see.
In this weekly bar chart of WEX, below, we can see that prices have more than doubled in the past three years. WEX survived a pretty deep correction last year and it is back above the rising 40-week moving average line.
The weekly OBV line shows a bullish rise the past two years but the Moving Average Convergence Divergence (MACD) oscillator is not showing us much strength even though it is above the zero line.
In this Point and Figure chart of WEX, below, we can see a recent upside breakout and a $257 price target.
Bottom line strategy: With only small divergences it looks like WEX can trade higher in the weeks ahead. Trade WEX from the long side risking a close below $195 for now. The $250 area is our Point and Figure target.
