That year, its shares peaked, but by 2018, when UNFI bought Supervalu, the company was weighed down from the acquisition and its stock paid the price (just not to shareholders).
Cramer said UNFI's current lowered guidance estimates seem unattainable, and that it's too late to short it. Hoping for a quick turnaround is not a good idea, either, he suggested. (Real Money Pro writer Paul Price, however, does see opportunity, so for his strategy, click here.)
Let's look at the charts of UNFI to see when they may look more attractive.
In this daily bar chart of UNFI, below, we used a log scale to display the prices. UNFI has been in decline in recent years. Prices have been cut in half, but I fail to see any true bottoming price action.
Dips below $8 look like they have been bought, but it may well be short-covering and not true accumulation. The slopes of both the 50-day and 200-day moving average lines are bearish or negative and rallies to the 200-day line have failed.
The daily On-Balance-Volume (OBV) line is interesting: It shows a sharp rally from November into January. Normally I would say that suggested some aggressive buying, but notice that prices do not follow the same pattern, and make a slightly lower high in January and that is why I think the buying has been largely short-covering. Prices and the OBV line should have moved together to a new high. The Moving Average Convergence Divergence (MACD) oscillator gave a cover-shorts buy signal in October, but it has struggled to stay above the zero-line in buy mode since then. Not the picture of strength, in my opinion.
In this weekly bar chart of UNFI, below, we went back further in time to capture the 2015 price peak. We used a log scale again, because of the huge price movement from high to low. Prices are below the declining 40-week moving average line. The weekly OBV line has been in a bearish decline since the 2015 peak and tells me that we have a long history of distribution, or selling. The MACD oscillator improved the past year, but still remains below the zero-line.
In this Point and Figure chart of UNFI, below, we can see that the program is looking for further declines to the $4.50 area.
Bottom line strategy: Avoid UNFI. The charts and indicators are not giving us any reason to go long. Further downside risk to the $4.50 area is possible.