During Tuesday's "Mad Money" program Jim Cramer spoke with Sean Connolly, president and CEO of food giant ConAgra Brands Inc. (CAG) , which is seeing its products fly off the supermarket shelves during the coronavirus scare.
Connolly said ConAgra is selling everything it can make, and that while canned goods were among the first items to sell out, snack foods and frozen foods have been selling swiftly, too.
When asked about ConAgra's food service business, which accounts for 10% of revenues, Connolly said the strength in packaged foods has more than offset those losses. Online sales in particular have been exceptionally strong.
Let's check and see if this business strength is reflected in the charts of ConAgra, which also received a close look on Tuesday from Real Money's Stephen Guilfoyle.
In this daily bar chart of CAG, below, we can see that prices made a spike high back in December around $35 and over the next three months dove down to $23 or so. Prices bounced sharply to the upside twice last month, retesting the 50-day moving average line and the 200-day moving average line. It looks like trading volume has increased in March, but what is really interesting is that the daily On-Balance-Volume (OBV) line only made a slight decline from the middle of December. This performance of the OBV line suggests to me that investors largely stayed with their long positions. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal and is on its way toward crossing the zero line for an outright go long signal.
In this weekly bar chart of CAG, below, we can see some positive technical developments if we ignore the longer-term downtrend in price. The weekly OBV line has been neutral the past year and just turned a bit more positive. The MACD oscillator is on the zero line and soon could cross to the upside for a buy signal.
In this daily Point and Figure chart of CAG, below, we can see just how strong the charts are; we can see a good area of accumulation (buying) in the mid-$20s and very little overhead resistance. This makes the price target of $48 more believable.
Bottom line strategy: Traders could go long CAG closer to $28 and risk a close below $24 while setting a potential target of $48.