Technical analysis

Two stocks to watch: week 6, 2024

By Antreas Themistokleous

07 February 2024

3166 two stocks to watch week 6

As we approach the release of their fiscal quarter earnings reports for December 2023, investors and analysts alike are keenly awaiting insights that will shed light on both companies' financial health and strategic directions. 

This article delves into the recent stock performance, financial metrics, and technical analysis of these behemoths, offering a comprehensive overview of their current standing and future prospects. 

PepsiCo, Inc. (PEP)

Shares in PepsiCo, Inc. managed to recover some of the losses incurred in the previous quarter, although they are still in an overall loss year over year. The company is expected to report its earnings for the fiscal quarter ending December 2023 on Friday, 9 February, before the market opens. The consensus EPS forecast is 1.72 USD, compared to the result for the same quarter last year of 1.67.

The rather negative image of the company’s performance is also reflected in the financial statements. As of 30 September 2023, the company did not have the ability to repay its short-term liabilities with the current assets at hand, with a current ratio recording just 88%. The net income of the company took a beating in the first quarter of 2023 and has struggled since to recover to higher sales figures. On the other hand, the dividend yield of the beverage giant is just shy of 3%, which is highly appealing to longer-term investors.

On the technical side, the price has been trading in a triangle formation for the last four months, with the price approaching the end of this formation in the coming sessions. So far, the boundaries of the triangle have been respected without any whipsaw outside the formation. The price has reacted to the resistance of the upper band of the Bollinger Bands recently and is currently correcting to the downside, with the 38.2% of the weekly Fibonacci retracement level acting as support. The Stochastic oscillator is recording extreme overbought levels, while the 50-day moving average has recently crossed above the slower 100-day moving average, indicating that the trend might still be bullish for the time being.

Coca-Cola Company (K)

Coca-Cola Company's share price rose by 5% in the last quarter of the year and managed to regain some of the losses incurred in the previous quarters of the year. The company’s earnings report for the fiscal quarter ending December 2023 is set to be released on Tuesday, 13 February, before the market opens. The consensus EPS for the quarter is 0.48, compared to the same quarter last year of 0.45.

The company had consecutive increases in its net income throughout the entirety of 2023, with the last recorded figures on 30 September 2023 showing an increase of around 8% year over year. Cash on hand also marked a 16.75% increase year over year, while the long-term debt was reduced by almost 4%. Adding to the positive image is the dividend yield, which is slightly more than 3%, making the shares of the beverage giant an attractive addition to any long-term investor's portfolio.

From the technical analysis perspective, the price has faced strong resistance on the upper band of the Bollinger Bands as well as the 61.8% of the daily Fibonacci retracement level and has since corrected to the downside. The 50-day moving average is trading well above the slower 100-day moving average, validating the overall bullish momentum in the market. At the same time, the Stochastic Oscillator is near the extreme overbought level, hinting that there might be a continuation of the recent correction in the near short term. 

On the other hand, the 20-day moving average is acting as support, which could completely decline the correction narrative since it is also combined with an inside support level where the price reacted in mid-January and could potentially support the downward momentum of the price, resulting in a resumption of the bullish direction.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.