Six Month High and a Channel

The six month chart shows some early weakness down to the low $50 area for Abbott Labs’ stocks but since May of 2008 the stock has rallied recently reaching a new six month high near $60. The current range is between $56.50 and $60 and a breakout in either direction would signal additional movement to the upside or the downside.

Fundamentals

The fundamentals of the company are solid given the climate in the United States and abroad. Earnings for the current year compared to a year ago are predicted to increase 15.1%. Revenue is increasing for the same period with a similar increase of 14.2%. The price to earnings ratio (P/E) is right around 22 and therefore the stock is not overly expensive but close to the growth rate.

The Trade

Wait for an additional 5% pullback and begin to build a position in Abbott. Their next earnings release is scheduled for October 15^th so you can hold the position until the earnings week occurs. If there is a correction in the stock or a major change in the business that signals a sell, exit the position accordingly.

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Abbott Laboratories

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