The Parsippany, New Jersey-based holding company for branded foods, B&G Foods, Inc. (NYSE: BGS) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been forming a downtrend channel during the past several months. This is marked in pink color lines in the daily chart. The stock had typically taken support at the bottom of the channel before bouncing back. The stock has currently broken out of the downtrend channel, indicating possible bullishness.
Daily Chart – BGS
#2 Price above MA: The stock is currently above the short-term moving average of 50-day SMA, indicating that the bulls currently have an upper hand.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color).
This indicates a possible bullish setup.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and the ADX line is currently above both (+DI) and (-DI).
#6 MACD -Price Bullish Divergence: There is a bullish divergence between MACD and price in the weekly chart. While the price formed a lower low, the MACD formed to a higher low. This is marked as pink dotted lines in the chart. A bullish divergence is usually the sign of a possible upmove in the near-term.
Weekly Chart – BGS
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well. The stochastic is also moving up from oversold levels. All these indicate possible bullishness.
#8 MACD above Signal Line: In the weekly chart as well, the MACD line (blue color) is above the MACD signal line (orange color) which is a bullish signal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BGS is above the 200-day SMA at around $18.10.
TP: Our target prices are $25 and $30 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $15.20. Note that the stop loss is on a closing basis.
Our target potential upside is 38% to 66% in the next 3-6 months.
For a risk of $2.90, our first target reward is $6.90 and the second target reward is $11.90. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel breakout level with high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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