By: Pej Hamidi
Here’s a gift for you trend followers: Schweitzer Maude (SWM). Or those that like to buy stocks whose technicals and fundamentals are both in agreement. They’re both screaming BUY! The chart below is a weekly chart (oh my, a weekly chart???). I wanted to show you how much the 10 week Exponential Moving Average is dominating this stock. Volume retreats, like it should on the pullback, and notice the Stochastic (2nd from the top) has been overbought since June of 2009. That means the stock is in a trend and Stochastic is the wrong indicator to be watching.
This is the only company in the world that makes fireproof cigarette paper. Sounds odd, but of the kind that should you fall asleep watching TV for instance, it’s not going to burn the house down. Now they’re expanding to China. First question I asked is: “Why wouldn’t China make these themselves?” Well it looks like Schweitzer got the international patent and China is trying really hard to show the world that intellectual property rights are respected and will be protected. Can you imagine a country of that size, with such a high percentage of smokers, being penetrated by this company and this company only? It’s an unbelievable opportunity and the chart agrees. A 10 point correction from $85 during this pullback is about all you’re going to get. Maybe as low as $70-72, but not much lower. It’s headed for $100. Start scaling into a long position and if I were you, I’d be a long-term investor on this one, just selling any price spikes and re-entering on the dips. You can use $70 as a stop and a recovery back above $70 as a re-entry.
