Be a Patient Buyer of United Natural Foods

The shares have gapped higher in reaction to the company's EPS beat.

United Natural Foods Inc. (UNFI)  reported its latest earnings results Wednesday. Real Money's own Paul Price has covered the company and stock extensively.

We last reviewed UNFI back in January 2020 where we wrote "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." Prices sank to $5.05 last March as the pandemic hit the markets. 

What do the charts look like now? 

In the daily Japanese candlestick chart of UNFI, below, we can see a much different and much stronger chart than what we saw before the pandemic. Prices made a large sideways consolidation pattern around $16 before a January 2021 rally took hold. The shares have gapped higher this Wednesday as traders reacted to the company's EPS beat. It is early in the trading day but the candle pattern could be a bearish gravestone doji. Prices are above the rising 50-day and the rising 200-day moving average lines.

The On-Balance-Volume (OBV) line shows strength from early January to confirm and support the price gains. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside last week for a fresh outright buy signal.  

 

In the weekly Japanese candlestick chart of UNFI, below, we can see the big base and extensive turnaround over the past three years. The 40-week moving average line did not show a positive slope until March 2020.

 

The weekly OBV line shows a strong rise from the March 2020 low. The MACD oscillator is in a bullish alignment.  

 

 

 

In this daily Point and Figure chart of UNFI, below, we can see that prices have nearly reached the $38 price target.  

 

 

 

In this weekly Point and Figure of UNFI, below we can see a potential longer-term price target in the $64 area.  

 

 

 

Bottom-line strategy: UNFI is probably going to fill the opening gap from Wednesday so I would be a patient buyer in the $32-$31 area. Risk to $27. Our longer-term price objective is $64.

 

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