These four dividend-paying businesses are industry leaders, but the market has unfairly punished all of them. TheStreet's Ben Reynolds says investors should take advantage of the stocks' current discounts by "loading up on these high-quality businesses trading at bargain prices."
But what do the charts say? Many times, the technical analysis of a stock differs from its fundamental analysis -- and in the case of three of these dividend stocks, caution is warranted.
If you use moving averages, you want to remember to trade in the direction of the moving average line. Prices are above the shorter, more-sensitive 50-day simple moving average line, and the slope is pointed up. Prices have tested the longer 200-day average line recently but they have not closed above the line.
The on-balance-volume, or OBV, line has turned up from a January low. A rising OBV line tells us that buyers are more aggressive with the volume of shares traded heavier on days when ADM has closed up on the day. The trend-following moving average convergence/divergence oscillator is above the zero line which is a positive.
ADM looks attractive on the chart now, but a close below $36 would weaken the short-term picture.
Walmart is above its rising 50-day average line and above the 200-day line, but the slope of the 200-day is still pointed down. Since the days of Charles H. Dow, we like to see volume increase with and confirm the uptrend, but here the OBV line is dull and flat, so we are not comfortable with a long position at this time.
Last, our momentum study weakened during the advance from the November nadir. Slack volume and weakening momentum should deter you from the long side of Walmart.
Traders should be happy if they are long Exxon Mobil (XOM - Get Report) . Exxon is above its November high, which turns the longer-term trend bullish. Prices are above the 50-day and the 200-day moving averages. The slopes of both of these average lines are positive. The OBV line is pointed up, and we see no bearish divergences to raise a flag.
Apple (AAPL - Get Report) has been in a downtrend the past 12 months. but the bears may have gotten a tighter grip recently. The OBV line is pointed down and looks like selling is more aggressive recently. Prices are below the 50- and 200-day moving averages, gaping below the 50-day last month. So far there is no bullish divergence between the price action and the momentum study. Prices have found support in the $95-to-$90 area so far, but that could give way.
Apple is a holding in Jim Cramer's Action Alerts PLUS portfolio. Cramer and Research Director Jack Mohr wrote in a recent weekly roundup:
"We remain confident in Apple and will continue to hold this name for the long term. Apple isn't simply a hardware company; it is an ecosystem that engenders long-term loyalty and constantly innovates on behalf of its customers. To those who have already written Apple's obituary, we and Tim Cook could not disagree more."