Wednesday, November 17, 2010

Time To Party In Tupperware With The Stock Pulling Back

A Small tupperware container.

Seal in a low basis in TUP

In case you missed the Tupperware party during the fall season, consider this week’s 2% correction an invitation to arrive fashionably late.

The “Tupperware space” was a big winner over the past two-plus months. Since September 2, Jarden Corporation, Newell Rubbermaid, and of course Tupperware Brands have rallied 12.9 percent, 10.7 percent, and 14.2 percent, respectively. This past week, Newell and Jarden bent to the market’s force, providing opportunities for those who didn’t join the party.

Since hitting a 6-month high in October, tupperware and diversified consumer products producer Jarden Corporation are down a little over 4 percent, serving to drastically repair Jarden’s technical picture. Over that time, Jarden’s relative strength index (RSI) has improved from an overbought position above 75 to a reading near 47, and the stock’s slow stochastics have fallen from an overbought reading above 80 to below 40.

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Jarden stock has been consolidating and building support following profit taking in the wake of Jarden’s third-quarter earnings report last month, potentially preparing for a new rally.

The charts for Georgia-based Newell Rubbermaid?appear even more favorable. The stock formed a rounding top pattern, but volume has been steadily declining on the downturn. Newell, who also produces writing instrument brands like Sharpie and Papermate, in addition to other products, features an RSI near 37 and slow stochastics below 12, both being indicative of an oversold position. Currently priced near $17.14, look for Newell’s technicals to form a bottom before a potential retracement to the 10-day exponential moving average and to the last strong-volume open price near $17.93 which occurred on November 5.

Newell?also has?the advantage being?priced at 19-times earnings, versus Jarden which trades at a rich price-to-earnings multiple of 47. Yet both stocks?have strong short-term potental based on the charts. Although Newell and Jarden offer extremely modest annual dividend yields of about one percent, compared with Tupperware Brands’ two percent, both stocks may be sending out?invitations to buy the dips.

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