In his first "Executive Decision" segment of Mad Money Tuesday evening, Jim Cramer spoke with Michael Stubblefield, president and CEO of Avantor (AVTR) , a global provider of products and services for the life sciences industry.
Stubblefield said science is on display in a big way now that Covid vaccines are being distributed. The sophisticated technologies used to produce these vaccines at a global scale have never been done before, he said, and they require ultra-pure materials like those Avantor produces.
Stubblefield added that Avantor's order book has more than doubled in recent months.
Cramer said Avantor is a critical supplier throughout all of the life sciences industry and needs to be a part of your portfolio.
Let's check out the charts to see how the technical picture combines with the fundamentals.
In the daily bar chart of AVTR, below, we can see how the shares were sharply cut down in early 2020 before making a spike low in March. Prices have come back and have climbed nearly five-fold from their Covid nadir. AVTR is trading above the rising 50-day moving average line and above the rising 200-day moving average line.
The math-driven On-Balance-Volume (OBV) line has been rising steadily since March and tells us that buyers of AVTR have been more aggressive with heavier volume being traded on days when prices have closed higher. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since late April.
In this weekly Japanese candlestick chart of AVTR, below, we can see a large and dramatic hammer pattern marking the March low -- cannot miss it. Prices are above the rising 40-week moving average line.
The weekly OBV line is rising nicely and the MACD oscillator is bullish in this time frame.
In this daily Point and Figure chart of AVTR, below, we can see that the software is projecting a potential price target in the $36 area. The steep and uninterrupted rise from $17 to $28 suggests we are now likely to see some sideways consolidation before renewed gains.
In this weekly Point and Figure chart of AVTR, below, we can see that a $44 target has been calculated.
Bottom-line strategy: AVTR made a base around $18 so a double to $36 is very much within reason. However, the steady rise since March suggests a period of sideways consolidation is needed. Look for a $25-$29 trading range for a few weeks before the uptrend resumes. Traders could use available weakness to begin building a long position. Our potential price targets are $36 and $44. Risk to $22 for now.