The market's pushed several stocks higher today - and this week - which is great if you have a time machine. The question is, which stocks are acting like they're on the verge of a breakout? Though not an exhaustive list, the answer to the question is RadioShack Corp. (RSH), Safeway Inc. (SWY), Leap Wireless International Inc. (LEAP), and Dish Network Corp. (DISH).
Here's a closer look at what needs to happen for each chart, and where the stock might go if things go well.
Dish Network Corp. (
DISH) got hit as hard as any other stock did in 2008, but has recovered quite nicely since then - shares are up about 100% since the March low. DISH is attractive right now, however, because they've pulled back about 20% from their August high... and are starting to resume the bigger uptrend.
That said, it should be made clear that a move higher for Dish Network isn't going to be something day-traders are interested, and maybe not even swing traders. At the heart of the rebound since March was the break above a resistance line on the DISH chart that had been in place since late 2007; long-term patterns set up long-term trades.
Still, considering DISH is trading at about 1/3 its peak 2007 value --
coupled with the fact that the forward-looking P/E is a plausible 7.7 -- Dish Network makes for a compelling bullish idea at current prices.
Safeway Inc. (
SWY) may seem like a strange breakout candidate; grocery stores are hardly the stuff exciting trading is made of. Our response? No argument here, but a rising stock is a rising stock, and there's nothing wrong with interest in a little less upside if there's a lot less risk.
In any case, the attraction to Safeway is a bit of a contrarian idea. The message board posters and users are very, very down on SWY right now. Not that they're always wrong, but they're frequently misguided. And, the fact that the forward-looking P/E for SWY is 9.9 seems to have escaped these investors. That's very low, even by grocery store standards.
A breakout, however, has not yet materialized. The tide is turning though, in that SWY shares are starting to make higher lows. We think the key will be getting above the 200 day moving average line, current at $20.50. That would also carry Safeway shares past a long-term resistance line.
It's still not likely to be a white-hot rally if it does take hold, but it could add some stability to aggressive portfolios.
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Trading Alerts for DISH, SWY, RSH, LEAP ----------------------------------------------------------------------
Leap Wireless International Inc. (
LEAP) may qualify as the only true swing trade idea on our list today, though confidence in its upside potential is high.
In short, LEAP was oversold after a major tumble in Q2, but has started to rebound over the last couple of weeks. The good news is, the current price of Leap Wireless International shares ($17.96) is still miles under March's peak of $40.00.
Can LEAP actually reclaim that level, and hand out more than a 100% gain? Anything's possible. That said, also note there are a couple of falling resistance lines currently at $37 and $32 that could cap a rally as well. Still, that's a ton of room to run for Leap Wireless.
And finally, is
RadioShack Corp. (
RSH) looks like it's got a lot of upside potential from current prices.
Truth be told, the breakout here is well underway. Though we'd normally prefer not to jump on a move that began weeks ago, RSH is a worthy exception... there could be months of upside left to go. Simultaneously, RadioShack shares have been pretty good about stopping at checkpoints every so often, and giving new buyers a chance to wade in; we're at one of those checkpoints now.
The next leg of the RadioShack uptrend will be getting past the ceiling at $16.30, and moving on up to last year's peak of around $20.00. That's not necessarily the end of the line for RSH though - the stock was able to test resistance at $35 between 2001 and 2007. As well run and as profitable as the company is (with a P/E around 10), the company may justify big stock gains with solid and improved earnings results.
So, let's treat RSH as a short-term swing trade for now, but be willing to run it into a long-term holding if/when the time comes.
If you'd like to know when or if we issue trading alerts specifically for LEAP, DISH, SWY, or RSH, then be sure to subscribe to our free e-newsletter. It's delivered two to three times per week.
