Alert: 27.6% Upside in Technical Breakout?
Investment Alert: Buy BYND Under $13.10/share
Disclaimer: Investment Alerts have a medium to long-term time horizon. These do not constitute financial advice and you should contact a financial advisor before deciding whether it is appropriate for your individual circumstances.
Usually we like to find fundamentally undervalued stocks that have a proven track record of growing through thick and thin. But every once in a while it’s fun to find a purely technical play where we cast the financials aside and play a breakout to the upside that has limited risk and lots of possible upside. Beyond Meat falls into that category right now.
Key Points
- Beyond Meat share price has plummeted like a stone in the past 3 years by over 95% at all-time lows
- A short-term technical pattern suggests that it could pop by as much as 27.5% if it breaks out
Beyond Meat Is Down 95% But Is a Pop Next?
Take a look at the chart of Beyond Meat over time. It’s truly awful, isn’t it. From $240 per share in 2019 to $12 per share in 2023, the destruction of wealth has been unmitigated.
Just consider a 100 share investment back in 2019 would have set you back $24,000 and if you held until today you would be sitting on closer to $1,200 per share, a 95% loss in value. At all-time lows, the percentage loss was even worse.
The red warning signs should probably be going off in your head at this stage: steer clear of this capital destroyer.
But before we swiftly cast this piece of faux meat aside to the trash can, let’s zoom in a little closer on the chart to see the recent price action.
As you can see from the most recent share price movement in BYND, a bullish flag has formed.
The stock is making a concerted push to break above the upper flag and a move north of $13 per share signals that a continuation of the bullish trend lies on the horizon.
How High Could The Stock Go?
A breakout above $13 per share would suggest a move up to $16.60 per share would be in the cards. That would translate to a 27.6% gain to the first level of resistance.
There are various interim levels of resistance at $13.80, $14.50 and $15.80 so if fast money is the goal, hanging around for the full 27.6% could be ambitious.
Examining support levels, it does appear that downside risk exists all the way to $10 per share but this isn’t a stock to hold all the way to that level, but rather a break below the lower flag line at $11.50 would signal it’s time to look elsewhere for better opportunities.
How To Play The Pop
If a pop occurs, it’s going to happen near-term – if history is any indicator of how Beyond Meat trades. This isn’t a play to bet the farm on by any means but rather a short-term speculative bet that has the potential to pop quickly, and equally the possibility to drop furiously.
The key to long-term success on plays like this is a tight stop and discipline, meaning stick to the levels: let the stock run into the green and exit near the resistance levels but equally cut and run if support is broken.
Most importantly, don’t turn the trade into an investment. A stock that has dropped 95% can still drop another 95% after all.
