Buy Philip Morris
Philip Morris International (PM) - Get Report is set to report second-quarter earnings results before the opening bell Tuesday. The New York-based company has seen its shares rise about 6% since the last time I discussed the company. During that span, its shares have moved from around $98 to a recent high of $104.20. That's not a breathtaking return. But Philip Morris is seeing its estimates rise both for 2016 and 2017.
The fact that estimates are rising following Brexit should be encouraging to shareholders. This is because the European Union accounted for about 30% ($1.86 billion) of Philip Morris' total first-quarter sales of $6.08 billion. Rising estimates, including a target of a 10% rise in fiscal 2017 earnings, suggest that Philip Morris's fundamentals are intact.
From a technical perspective, the long-term trend in Philip Morris stock points to a possible rise of 9%. Take a look at the chart below, courtesy of TradingView.
Philip Morris shares are trading at $103.29 on Monday morning. The stock has risen almost 18% year to date, besting not only the 5.6% rise in the S&P 500 (SPX) , but also the Consumer Staples Select Sector ETF (XLP) - Get Report , which has risen 10%.
As you can see from the chart, Philip Morris stock had bounced between $102 back down to $98 several times before finally breaking out with the rest of the market. That consolidation factor is important to consider amid what some are calling an overheated market. The consolidation could shield Philip Morris stock from a massive decline if or when the market cools off.
The shares are also well above their critical moving averages: the 20-day ($101.39 -- blue line), 50-day ($100.60 -- pink line) and, most importantly, 100-day ($98.95 -- yellow line). The fact that the stock is almost 5% above the 100-day average further affirms that consolidation has taken place. Support is now at around the 20-day at $101 and, below that, at $98.
For now, the chart suggests a possible rise toward $113. That is just $1 shy of JPMorgan's recent price target increase to $112.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.