In his second Executive Decision segment of "Mad Money" last Friday, Jim Cramer sat down with Ben Wolin, the new president and CEO of Covetrus Inc. (CVET) , an animal health technology company that sprung to life last week, climbing 47% in five days on a favorable earnings report after several months of losing ground.
Wolin said the first step in fixing a problem is to admit that you have one. He said Covetrus "didn't get it right" when it came to its recent merger and the company had too many competing initiatives and priorities.
Wolin said Covetrus explained to investors this quarter that it needs to slow down in order to speed up and it is now on the right track to continue its growth. He noted that Covetrus has more than 100,000 customers and is in a massive and growing market.
Let's check out the charts.
In this daily bar chart of CVET, below, we can see a downtrend from the start of trading in February but a shift to the upside began in October. Prices stayed below the declining 20-day and 50-day moving average lines for much of this year. This month prices closed above the bottoming 20-day moving average line and above the bottoming 50-day line. (When we have more price history we will switch to the 50-day and 200-day moving average combination.) Trading volume has increased significantly since early October and the On-Balance-Volume (OBV) line turned to the upside after a multimonth decline. The trend-following Moving Average Convergence Divergence (MACD) oscillator is about to cross the zero line for an outright go long signal.
In this Point and Figure chart of CBET, below, we can see a potential upside price target in the $21 area.
Bottom line strategy: CVET may have made a low but a proper base needs more development and sideways price action. Traders could put CVET on their watch list, but wait until we see a broader base pattern.