For his second Executive Decision segment of Monday's "Mad Money" program, Jim Cramer spoke with Dylan Lissette, CEO of snack food maker Utz Brands (UTZ) .
Lissette said Utz continues to expand with top-line growth this quarter of 18%. It continues its acquisition strategy to grow into new markets and consolidate into its core brands such as Utz and On The Border.
When asked about life post-pandemic, Lissette noted that while sales continue to be strong at mass market retailers and grocery stores, dollar stores are also now becoming popular destinations for snack foods and in some rural markets are even replacing convenience stores. He said as our economy reopens Utz expects new items, such as snack mixes, to be very popular.
We reviewed the charts UTZ on March 22 and wrote, "Traders who went long UTZ in November should continue to hold those positions but raise stop protection to $23 from $17. Our new price targets are $31 and then $36. Aggressive traders could add to longs on strength."
Grab a bag of something to snack on and let's check the charts again.
In this updated daily bar chart of UTZ, below, we can see that prices stopped a dollar short of our $31 price target and promptly declined this month to break below the 50-day moving average line and hit our recommended stop at $23. Prices may have formed a bear flag pattern (continuation pattern) in recent days. The length of decline before the flag tends to be repeated when prices resume their decline. This could mean a test or a break of the rising 200-day moving average line around $21.50 or so. The On-Balance-Volume (OBV) line is showing a little softness this month, suggesting that sellers of UTZ have become more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and bearish.
In this weekly Japanese candlestick chart of UTZ, below, we see a bearish picture. Notice the large red candle as part of a top reversal pattern. The rising 40-week moving average line is not far away and we should be prepared for a test of that indicator. The OBV line has confirmed the price rise until this month, when it shows a dip. The MACD oscillator crossed to the downside this month for a take profit sell signal.
In this daily Point and Figure chart of UTZ, below, we can see that the software is projecting a possible downside target of $15.
Bottom line strategy: I am assuming that traders either took profits near $30, short of our target, or were stopped out at $23. The charts suggest we could see more weakness, so I would avoid the long side of UTZ for now. Let's look at UTZ again around $18.
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