In his first Executive Decision segment of Monday's "Mad Money" program, host Jim Cramer spoke with Barry McCarthy, president and CEO of Deluxe Corp. (DLX) , the check printer that has transformed itself into a payments and business technology company.
McCarthy said Wall Street has yet to catch up to the Deluxe story. Thanks to recent acquisitions, Deluxe is now a one-stop shop for small and midsize businesses that can offer HR and payroll services as well as credit card acceptance and cash management assistance.
McCarthy said Deluxe also has an up-and-coming data business that can provide high-converting lead lists to financial institutions whether they are targeting consumers or businesses.
Finally, McCarthy noted that check printing is still a great cash generator, especially because his company continues to take market share.
Let's "check" out the charts.
In this daily bar chart of DLX, below, we can see that prices topped out in May and June and then declined into a September low. Prices have recovered modestly this month, but we need to look closer. DLX has rallied above the 50-day moving average line but its slope is still negative. The 200-day line is still rising but intersects around $41. The On-Balance-Volume (OBV) weakened from early May to September and has only made a slight recovery in recent weeks. This is not the pattern of aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in September and is almost back to the underside of the zero line now.
In this weekly Japanese candlestick chart of DLX, below, we see a mixed picture. There is a bullish hammer pattern at the low in September, but the rally from that low is not particularly strong. Prices remain below the 40-week moving average line. The weekly OBV line only shows us a sideways move after a decline; this does not show a return to aggressive buying. The MACD oscillator crossed below the zero line for an outright sell signal.
In this daily Point and Figure chart of DLX, below, we can see a downside price target in the $23 area.
In this weekly Point and Figure chart of DLX, below, we used close-only price data. Here we have a lot more price history but still have a downside price target of $25.
Bottom line strategy: There are thousands of securities to invest in, so I am reluctant to recommend stocks that are waiting for Wall Street to discover them. I would avoid the long side of DLX.