Varun Beverages Ltd. stock is worth watching as the stock is forming a 11-week, 23% deep Cup Without Handle Base. The current price is only 7% away from its ideal buy price of INR 918. Aggressive investors could use any tight area breakout inside the base as an opportunity to initiate a small position. A conservative approach may be to add the stock to your watchlist so that you are ready to pounce if it breaks out to the traditional entry point.
The key trend lines, 10 and 40-week moving averages are at a comfortable position. The current trends of both the averages are upward and the 10-week moving average is trending above the 40-week moving average. The current price of the stock is trading around 9.0% away from the 10-week moving average.
In the last twelve months, Varun Beverages Ltd. has rallied nearly 69.5% as compared to 43.9% for the Nifty500. It has a Relative Strength Rating of 54. We definitely would like to see improvement in the rating. At this point we are taking a step back and focusing on the RS Line.
The Relative Strength Line of the stock is offering a lot of encouragement to investors. It has been making good progress in the last four weeks. The overall long term trend of the line is also trending upward. If Varun Beverages Ltd. can maintain this outperformance, it could make sense as a CANSLIM trade.
Another key part of the jigsaw is institutional sponsorship. Varun Beverages Ltd. has an Accumulation/Distribution Rating of 'A'. This represents heavy institutional buying over the past 13 weeks. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.
On the earnings front, Varun Beverages Ltd. has an excellent EPS Rank of 95, which indicates consistency in earnings. The sales for the stock have grown by 13% over the past three years; however the earnings growth remained muted at -1%. Its 3-years earnings stability is 30, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 38% and 19%, respectively. The 5-years earnings stability is 51. The return on equity for the last reported year is 10%.
The stock belongs to the industry group of Beverages-Non-Alcoholic, which is exhibiting a fair amount of strength in the current market environment. The current industry group rank is 48. The current price of Varun Beverages Ltd. is -7% off from its 52-week high price and 98% above its 52-week low price.
The stock appears on our idea lists: Minervini Trend Template