Downside Limited In Cadence Bancorporation

There is a lot to like in the technicals of Cadence Bancorporation (CADE) at present. The share price has been caught in a sustained decline for some time now. Buying volume though is well up this year. We can see this bullish volume trend in the On-Balance Volume indicator on the daily chart below. This indicator takes note of either the buying volume or selling volume for a given day. If it is positive, it adds this number to the overall total. If it is a minus number, it simply takes it away. The result is a key indicator which gives us a good read on positive and negative volume.

Buying volume surge in CADE

CADE close to a bottom

Strong Insider Buying

Furthermore the OBV line shows the bullish divergence continues to be in play which is an encouraging sign for the bulls. We have had sustained insider activity over the past 8 months. These purchases have been made from the COO and the CEO. Insiders are essentially the people in the know. At any given time, they may have plenty of reasons to sell. When they buy however, it invariably means that they believe the price is going to go up.

Strong Recent Buying In Cade

Strong Insider Buying

Source: Finviz.com

As technicians, we believe that the share-price inevitably will follow the volume trend. What we are seeing on the technical chart is merely the fact that decreasing selling pressure in the share-price is being demonstrated in how volume has been trending. Suffice it to say, we believe it should only be a matter of time before a significant bullish move transpires

Cadence pays out a $0.70 dividend which equates to a current 4.19% yield. Many times, the strength of the dividend is a good read on where earnings and consequently shares are headed in the near-term. The strength of the dividend is found in how its key financial metrics such as cash-flow and debt have been trending.

On the cash-flow statement, we can see that $80 million was paid from a free cash-flow kitty of $246 million over the past four quarters. This gives us a pay-out ratio of 32% which is attractive. The encouraging trend here is the sustained growth in free cash-flow over the past few years. Increasing cash-flow is going to facilitate growth in the dividend.

Balance Sheet Getting Stronger

Shareholder equity reached $2.47 billion in the latest quarter which means the firm is currently trading under book value. Cadence Bancorporation´s market cap come in at $2.11 billion at present. Growing net worth on the balance sheet positively affects the share price of the company over time. Retained earnings came in at $543 million in the third quarter. This line-item informs us on whether management has been reinvesting back into the business. Retained earnings is up 60% since December 2017 which is impressive given the dividend payment as well as the fact that the firm has bought back quite a bit of stock over the past 12 months or so.

Earnings per share came in at $1.72 last year and are expected to hit $1.89 this coming year. Rising earnings and rising book vale bode well for both the stock and dividend going forward. Even from an earnings standpoint, the current dividend pay-out of $0.70 per share is also well covered by forward expectations of $1.72 per share.

To sum up, shares of Cadence Bancorporation (CADE) are currently trading with a forward earnings multiple of 8.8. The firm´s assets, sales and cash-flow also are selling at attractive multiples. Furthermore, with book value and earnings expected to rise, we believe there is a good opportunity for shares to start a sustained rally here. Let´s see if the recent bullish volume trend in Cadence Bancorporation can finally move the share-price northward.

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Kronos Looks Close To A Long Term Bottom

The specialty chemicals company Kronos Worldwide (KRO) has lost well over 50% of its market cap over the past 2 years. As we can see from the chart below, shares have managed to stay above their 2019 lows but we are still trading precariously close to them. As we can see from the MACD indicator below, we are very close to a technical buying signal. If indeed, we get a crossover here in the near-term and a convincing break above the company´s 10 month moving average, then the odds would definitely strengthen that multi-year lows for the shares are in. Although the monthly histogram has not yet crossed over its own zero-line, it is very close to doing so at present. Every time, the histogram crossed over into bullish territory, the share-price rallied. The buying volume on the second chart places the odds in favor of a bullish move here.

Illustration on How Volume In Kronos Has Been Rising

 

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Consistent Income – The Name Of The Game In Investing

Remember the goal of investing is for income – period. Whether that is value plays (through dividends and a return to intrinsic value), swing plays or covered calls, the goal is the same – income. In saying this, from our own results, our time has to be spent mostly on idea-generation. The trader/investor with the most good ideas invariably wins.

Here are the best of the bunch which we researched this week concerning solid setups for

  1. Discounted value play
  2. Swing trade
  3. Covered call trade
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ArcelorMittal (MT) Close To Confirming A Double Bottom Reversal

ArcelorMittal (MT) Close To Confirming A Double Bottom Reversal

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Hilton In Danger Of Printing A Double Top

Double Top?

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Patience Required In Movado

We are eyeing up the Movado group for a long-term play. The video below has a monthly chart going back about 15 years and like we always say to our followers, long-term charts are extremely important. The technical analysis approach is all about history repeating itself and investing in-line with the underlying trend. Remember that it takes so much more effort for a long-term Trend to reverse rather than continue. Although shares have been making higher highs over the past few years, they are caught at present in a trading range where they have consistently tested key support levels. We outline in the video why there is no rush getting long the stock at present despite the company´s very attractive valuation of a book multiple of just over 1.0 and a sales multiple of 0.8.

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Applied Industrial Technologies To Break Out ?

Applied Industrial Technologies To Break Out ?

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Honda Looks To Keep Uptrend Going

 

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Bullish On LKQ Corporation

When we look at any long-term prospect, we like to get a feel for what the company has achieved in terms of growth over the past decade at least. LKQ Corporation (LKQ), for example, has an enviable record with respect to its 10-year financials. With revenues currently coming in at $12.47 billion over a trailing twelve-month average, this means that the 10-year top-line growth average comes in at almost 20%. Operating profit over the same time frame has a growth average of close to 16.5%. These are very impressive numbers, to say the least.

 

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Has Crude Oil Started A New Intermediate Cycle ?

If we got a convincing rally above the 10 week moving average this coming week, then crude oil could have just started a brand new intermediate cycle. This coming week will be 33 weeks since that December low last year. We definitely are in the timing band. Lets see what this week brings. $56.22 per barrel is the first line in the sand the crude oil price needs to cross.

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