New Label for Avery Dennison (AVY) Stock: $71 Price Target

Bullish technicals show that the stock is poised to move higher.
By Bruce Kamich ,

NEW YORK (TheStreet) -- Avery Dennison Corp. (AVY) - Get Report is poised to move higher.

AVY is showing a bullish setup in this chart above. AVY was in a sideways trading range from December through April and broke out of that range at the beginning of May. Another trading range followed the first with AVY in a wide band bounded by $55 on the lower end and around $64 on the topside. This chart also shows the positive relationship with the rising 200-day Moving Average with the shorter 50-day positioned above it. Last, the trend following Moving Average Convergence Divergence (MACD) is rising and above the zero line telling us the trend is positive.

This longer-term view, above, of AVY shows the steadily rising On-Balance-Volume line, the bullish crossover of the MACD oscillator above the zero line and the positive trend of the 10-week and 40-week moving averages.

This last chart, above, is a Point and Figure chart and clearly shows the breakout over $64 for AVY and the price target of $71. A sell-stop at $62 is suggested if you buy AVY here on strength.

Separately, TheStreet Ratings team rates AVERY DENNISON CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate AVERY DENNISON CORP (AVY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 27.94% and other important driving factors, this stock has surged by 43.56% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AVY should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • AVERY DENNISON CORP has improved earnings per share by 27.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AVERY DENNISON CORP increased its bottom line by earning $2.62 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($3.37 versus $2.62).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Containers & Packaging industry. The net income increased by 27.1% when compared to the same quarter one year prior, rising from $64.30 million to $81.70 million.
  • The debt-to-equity ratio is somewhat low, currently at 1.00, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, AVERY DENNISON CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • You can view the full analysis from the report here: AVY
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