For his second Executive Decision segment of Tuesday's "Mad Money" program from the West Coast, host Jim Cramer spoke with Tarang Amin, chairman and CEO of cosmetics maker e.l.f. Beauty (ELF) .
Amin said e.l.f. continues to build a lot of market share as consumers see both prestige and value in its products. He said the company just passed Revlon as the No. 4 cosmetics brand globally.
When asked about inflation, Amin noted that e.l.f. has a two-tier pricing structure and has made no changes to pricing its value products, a move that was appreciated by consumers. The company did raise prices on some prestige items, however, but has not seen any decline in sales, he said..
Let's check out the charts of ELF.
In this daily bar chart of ELF, below, we can see that prices have soared in the last few weeks since the company reported earnings. ELF is trading above the now-rising 50-day moving average line and just below the 200-day moving average line. Trading volume increased on the recent rally and that is a positive sign old-time chart readers like to see. The On-Balance-Volume (OBV) line was in a decline from November but has started to turn upward, signaling a shift from aggressive selling to aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator has crossed back above the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of ELF, below, we can see a positive-looking picture. Prices almost made a large bullish engulfing pattern in May to make a bottom reversal (a clear bullish engulfing pattern can be seen on the daily chart of ELF - not shown). Prices have rallied to the underside of the declining 40-week moving average line, but it looks like prices can soon break above this indicator. The weekly OBV line shows improvement in May to support the price gains. The MACD oscillator has crossed to the upside for a cover shorts buy signal.
In this daily Point and Figure chart of ELF, below, we can see an upside price target of $39 is projected.
In this second Point and Figure chart of ELF, below, we used weekly price data and here, too, the $39 area is our target.
Bottom line strategy: Aggressive traders could go long ELF on any dip toward $27, risking to $25. The $39 area is our price objective for now.