Each week we identify names that look bearish and could offer interesting investment opportunities on the short side.
Using technical analysis of these stocks’ charts and, where applicable, recent actions and grades from TheStreets Quant Ratings, we target three names.
While we won’t delve into fundamental analysis, we hope this article provides investors interested in downtrend stocks with a good starting point to do further homework on the names.
Alarm.com issues a warning
Alarm.com Holdings Inc. (ALRM) was recently downgraded to Hold with a C rating by TheStreet’s Quant Ratings.
The stock of the provider of cloud-based services for smart residential and commercial real estate is a five-alarm brand. It has seen heavy selling, lower highs and lower lows for the past few months, and little upside during last week’s market meltdown. That means trouble.
Also note that the Moving Average Convergence Divergence (MACD) is now at a sell signal, cash flow is declining and the Relative Strength Index (RSI) is sloping down at a steep angle. There’s a lot of volume in this name, with strong selling as of late October. If you’re short, aim for the low $40s, but put a stop at $60 just in case.
Walker & Dunlop Sags
Walker & Dunlop Inc. (WD) was recently downgraded to Hold with a C rating by TheStreet’s Quant Ratings.
The multifamily and commercial real estate financing product provider is showing a bearish pattern from lower highs and lower lows to some support around $82. However, this area was penetrated last week and if $81 breaks there will be little support until $70. That would be a good target area.
The RSI is flattening out and the cash flow is not significant. Set a stop at $88 and aggressively move into the low $70 area.
B&G Foods is becoming obsolete
B&G Foods Inc. (BGS) was recently downgraded to Sell with a D+ rating by TheStreet’s Quant Ratings.
The distributor of shelf stable and frozen foods has performed miserably, trading below this 200-day moving average for most of the year. Nothing good happens below the 200-day ma, of course, and with a series of lower highs and lower lows, B&G Foods remains a short game.
Although the share has fallen sharply in recent months, further price losses are still possible. Cash flow is declining and the MACD is at a new sell signal. The RSI also just rolled over – no good here for BGS. So add a short here; Set a stop at $17 and aim for $8.
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