A breakout in mid-cap industrials should offer a tailwind to the on-the-up office furniture designer Herman Miller, All Star Charts’ Tom Bruni told Real Vision viewers on Trade Ideas.
“If we’re seeing equities as an asset class breakout, we want to own the strongest stocks within that and mid-cap industrials fit that bill,” he told Real Vision’s Jake Merl, noting that the S&P Global 100 chart looks like it’s going to break higher.
Mid-cap industrials are also in a strong position because Bruni sees signs that interest rates are stabilizing and will perhaps move higher, pushing money out of bonds and into equities.
Bruni likes Herman Miller because it is “breaking out of a multi-year, multi-decade downtrend relative to the industrial space as a whole,” as you can see from the chart below:
He suggests buying MLHR between $40 and $45 with a target price of $61 over the next 12 months. His stop loss would be $40, as the company has a 20-year base of support there. He’s confident that “there’s going to be buyers at that $40 level.”
Bruni added that the 20% jump the stock experienced after a better-than-expected earnings report does mean that the stock could pull back from current levels to $40 in the short-term, but added: “If you put it in the structural context of the stock, it’s gone nowhere for 20 years so this is just the initial breakout.”
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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