{"id":88166,"date":"2016-04-15T07:54:19","date_gmt":"2016-04-15T11:54:19","guid":{"rendered":"http:\/\/countingpips.com\/?p=88166"},"modified":"2016-04-15T07:54:19","modified_gmt":"2016-04-15T11:54:19","slug":"the-biggest-break-out-of-the-industrial-bargain-bin","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/04\/the-biggest-break-out-of-the-industrial-bargain-bin\/","title":{"rendered":"The Biggest Break Out of the Industrial Bargain Bin"},"content":{"rendered":"
April 15, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"The<\/p>\n

According to Bespoke Investment Group, the Dow Jones Industrial Average has gained, on average, 2.6% in April for the last 20 years.<\/p>\n

And April is off to a slow start, thus far.<\/p>\n

Month to date, the Dow has gained just 0.95%.<\/p>\n

Profit-taking after a strong month in March as well as earnings uncertainty are behind the recent pullback.<\/p>\n

One overlooked sector, however, is breaking out big time \u2013 and I\u2019ve got the perfect way to play the upside.<\/p>

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<\/div>\n

The Industrial Revolution<\/h2>\n

Industrial stocks have been punished in the wake of a two-year commodities rout<\/a>.<\/p>\n

But the weakening dollar and falling crude oil production have both provided a major boost to the sector.<\/p>\n

Rocked by volatility in the financial markets, investors are piling into gold \u2013 a traditional safe-haven play.<\/p>\n

Further, oil producers are positioning for price recovery in 2017 and beyond.<\/p>\n

As a result, Brent crude and gold are up more than 20% on the year.<\/p>\n

Burgeoning strength in the commodities markets has helped the Industrial Select Sector SPDR Fund<\/strong> (XLI<\/a>) to break a 10-month downtrend.<\/p>\n

The XLI is now up 5% on the year, compared to the 1% gain in the S&P 500.<\/p>\n

Even more impressive, industrial stocks have gained 16% off their January lows \u2013 beating the market by more than 5%.<\/p>\n

And a closer look at the sector reveals an even juicier opportunity.<\/p>\n

Overlooked and Undervalued<\/h2>\n

Fluor Corp. <\/strong>(FLR<\/a>) is a global engineering and construction firm.<\/p>\n

Founded in 1912 in Irving, Texas, the company provides industrial services to governmental and private sector clients in 32 countries.<\/p>\n

For the last 10 years, Fluor has been a consistent outperformer in the sector and in the broader U.S. stock market.<\/p>\n

Its shares more than doubled between 2006 and 2008. And, despite tanking along with the rest of the market during the Great Recession, Fluor made up most of its lost ground in the bull market that followed.<\/p>\n

That is, until the Great Oil Bust of 2014.<\/p>\n

The majority of Fluor\u2019s business comes from the oil and gas industry, and the oil bust hit them hard.<\/p>\n

Since 2013, annual earnings per share have dropped 29%, and revenue has declined more than 33%.<\/p>\n

Because of this, Fluor now trades at an eye-catching valuation, with much of its oil exposure priced in the shares.<\/p>\n

At 18 times trailing earnings, the stock is trading at a 21% discount to its 10-year average.<\/p>\n

The company is also sporting a price-to-sales ratio of 0.4, and a price-to-cash-flow ratio of just 9.11 \u2013 a discount to the industry average of almost 20%.<\/p>\n

The fundamentals look good, but here\u2019s why you should like Fluor right now\u2026<\/p>\n

Up off the Fluor<\/h2>\n

Since hitting its five-year high on January 22, 2014, its shares have come under heavy pressure \u2013 from the 2014 peak to its current 52-week low, the stock has fallen more than 50%.<\/p>\n

But over the last few months, Fluor has quietly staged a convincing comeback.<\/p>\n

\"Industrial<\/p>\n

First of all, Fluor\u2019s chart has produced a strong double bottom pattern extending back to July. As you may know, the double bottom is one of the most bullish technical chart patterns out there.<\/p>\n

Traders also love this pattern because it\u2019s one of the easiest to spot and trade effectively.<\/p>\n

In February, the shares broke through the fierce downtrend on more than double the average daily volume. The trend line breaks on increased volume have given traders the confidence that a new trend will hold.<\/p>\n

The stock also broke above its 200-day moving average (DMA) for the first time since July 2014.<\/p>\n

In fact, Fluor\u2019s 50-DMA crossed above its 200-DMA for the first time since October 2012 \u2013 and this moving average cross-over, known as a \u201cgolden\u201d cross, is incredibly bullish.<\/p>\n

But the stock\u2019s most<\/em> bullish technical condition occurred last week.<\/p>\n

As you can see in the chart above, the shares also took out key resistance at $51 in late March. And last Thursday, Fluor found strong support along that resistance.<\/p>\n

Why is this so important?<\/p>\n

Well, for technical traders, seeing is believing. And when prior resistance becomes support, the demand for shares jumps as new buyers come off the sidelines on proven strength.<\/p>\n

Fluor represents a huge bargain in one of the market\u2019s hottest sectors.<\/p>\n

If you missed energy\u2019s early year gains, here\u2019s your chance to position yourself ahead of oil\u2019s eventual recovery.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez<\/p>\n

The post The Biggest Break Out of the Industrial Bargain Bin<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com According to Bespoke Investment Group, the Dow Jones Industrial Average has gained, on average, 2.6% in April for the last 20 years. And April is off to a slow start, thus far. Month to date, the Dow has gained just 0.95%. Profit-taking after a strong month in March as well as earnings uncertainty […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-88166","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=88166"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88166\/revisions"}],"predecessor-version":[{"id":88189,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88166\/revisions\/88189"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=88166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=88166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=88166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}