With the NBA and other sports seasons in full swing this fall, you may be wondering if now is the perfect opportunity to buy Foot Locker (FL) stock, especially as they will release earnings shortly (November 19, 2006). While this can be said as a good deduction, there are other reasons and deeper answers to this question that, unfortunately, can delay or even abort your decision to proceed with your purchase intentions. While all the economic and fundamental analysis may indicate a strong run for this company, the technical analysis side of these indicators weighs much more heavily on a stock like Foot Locker.
To express those sentiments in more rudimentary terms, since its IPO days in the early 1970s, Foot Locker has provided evidence to the public that it is a difficult equity to assess. True, up until 1990, Foot Locker posted pretty solid earnings, but after that decade began, it appears that Foot Locker has struggled tremendously to overcome its identified resistance level of around $ 30 in share price terms. However, the good news is that Foot Locker has rarely dipped below its now identified support level of around $ 20. While that level may be a positive indicator for a large-cap stock for a year or two, in the case of about 16 years, it’s time to realize that Foot Locker has peaked and will continue to struggle to beat those $ 30 anytime soon. In fact, in recent years Foot Locker had an immense opportunity to face this heinous 10-point position. Since Foot Locker, as Yahoo Finance describes it, sells merchandise in the form of sports clothing and shoes, which are luxury items and should flourish for the past economic duration, the stock price, if the fundamentals are understood, should have risen. to new record levels. but instead, the price of a stock fell or almost reached breakeven during this time period. That has led me to conclude that now, especially since the US economy is slowing down into a recession, buying stocks would be a waste of capital and time to invest in a company like Foot Locker.
However, if for some reason it hurts or contains any desire to buy shares in this company, but only for a short term, there may be good news. Given that Foot Locker has recently reported fairly strong fundamental results in terms of revenue growth and operating income, which is supported by a strong P / E ratio, there may be a chance in the next two months to make some money. Since Foot Locker should normally perform well when consumers are confident and employed, the fundamentals of this consumer-based company, especially during this time of year, should be at their strongest. If that is the case, then there is a chance of gaining a good 10-20% in the coming months if all goes well, as Foot Locker is close to the support level of its position rather than resistance. However, if you plan to hold your stocks longer (around April 2007), be aware that there is a good chance that most of the capital gains that you would have accrued during that period will likely decrease, if not turn negative. . territory.
So while there is a small chance of making a profit from investing in Foot Locker over the course of the next several months, if I were you, I would rather invest my money in stocks with more proven results or make sure to take my shares out once I had won about 10-20%. As a long-term investor, I would definitely stay away from these stocks as over 16 years is too long for any capital to stay in one position.