For his second "Executive Decision" segment of Mad Money Thursday night, Jim Cramer spoke with David Foulkes, CEO of boat maker Brunswick Corp. (BC) , which just delivered a 20-cents-a-share earnings beat. Shares of Brunswick trade at just 7.6 times earnings.
Foulkes said Brunswick continues to see strong sales in all of its segments, including propulsion and service. Now is the time for Brunswick to shine, he said.
Supply-chain constraints continue to challenge the company, however. Inventories are down, with just 5,000 units among the company's 900 dealers.
When asked about rising interest rates, Foulkes said rates are not yet at levels where they would affect demand. But, he noted, only about 50% of boats purchased are financed.
In our last review of Brunswick on February 2 we wrote that, "My wife and I have enjoyed boating with cousins in Mystic, Connecticut, and with friends at the Jersey shore -- all the fun and none of the responsibility. Chart-wise, Brunswick is showing us a small upside price target with the risk of further declines. I would avoid BC as an investment but I do plan on taking a boating safety class this spring. Starting small."
Let's see how things are going today and where to navigate.
In the updated daily bar chart of BC, below, we can see that the shares have weakened from February into April. Trading volume has increased in the past two months but prices have remained weak so I would assume that some traders are voting with their feet. Prices are trading below the declining 50-day and the declining 200-day moving average line.
The movement of the On-Balance-Volume (OBV) line has been choppy in recent weeks but the longer-term trend has been lower. The Moving Average Convergence Divergence (MACD) oscillator is bearish but gave a cover shorts buy signal earlier this month.
In the weekly Japanese candlestick chart of BC, below, we see a bearish picture. Prices are in a downtrend and trade below the declining 40-week moving average line. The weekly candles are spinning tops but there is no bullish confirmation. A red (bearish) candle this week will refresh the downtrend.
The longer trend on the OBV line is down and the MACD oscillator is bearish.
In this daily Point and Figure chart of BC, below, we can see a potential downside price target in the $67 area.
In this second Point and Figure chart of BC, below, we see that the software is projecting a $57 downside price objective.
Bottom-line strategy: Sign up for boating and safety lessons but defer your purchases of BC for now.
