Hello Mr. Schizas:
Do you know anything about a stock called Kronos? Apparently they have the U.S. highway line painting (titanium) business “tied up,” with a 5-year backlog of orders. If this is the case, along with Mr. Obama’s plan to inject another $1-billion into highway/infrastructure development, would you consider this a viable long term (3-5 years) play?
Thank you for your time, John
Thanks for the assignment. The most frequently asked question in the universe of investing is ” Do you know anything about ... ?” My most frequent answer is more often than not a resounding ” not one single thing.” However, in the modern era with a personal computer and a connection to the Internet all can be revealed.
Kronos Worldwide Inc. is a leader in the production of titanium dioxide pigment used in paints and plastics. The chemical is desired because it provides optimum whiteness and opacity. On Sept. 30, the company announced a price increase of $0.25 per pound which can only help the bottom line.
Let's run the charts and see what we can learn about the prospects for KRO.
The three-year chart indicates the uptrend that the shares had been riding since summer 2009 has been broken. But what a ride from a low of $2.50 to the all time high of $34.50 in July, 2011. There is also a death cross that has formed that cannot be ignored.
The six-month chart illustrates the bounce off of the Oct. 4 low of $14.16. producing a 34-per-cent gain in three weeks. Yowzer! The question that we need answered is does KRO have anything left in the tank?
The MACD and RSI are signalling continued momnetum to the upside. The October move has formed a pennant which is a continuation pattern. The pennant suggests there is still some upside left in the advance.
There is resistance at $20 that has to be taken out if this run is going to contunue. The next corporate event for KRO is the release of third-quarter results, which is scheduled for Nov. 3. Volume, which was strong at the beginning of October, has thinned out. The lower number of shares trading has not been an aggressive drop, but a pullback none the less.
I can’t give you a forecast for a three-to-five year period. I just do not feel it's a realistic time frame. What I can tell you is that if KRO breaks above $20 it can run to $22 without a lot of resistance. Watch for a breakout and the calendar for the release of third quarter.
Make it a profitable day and happy capitalism!
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