Summary
• Kellogg (NYSE:K) rose by 9% on Thursday after the company posted earnings that beat Wall Street expectations.
• Based on its market cycles, we believe the stock may pull back in the near term but then has strong upside potential.
The company reported earnings per share of $1.00 and total revenue of $3.5 billion, compared to analyst estimates of $0.92 and $3.4 billion. Management confirmed its guidance for the fiscal year, which may have reassured investors.
CEO Steve Cahillane explained that, “Q2 was the purest example of [successful strategy execution] with organic net sales growth of more than 2%, which was broad-based.”
Our approach to stock analysis uses market cycles to project price action. K is clearly still in the rising phase of its current cycle. It has repaired its pattern and is suggesting that a major base is being built. While the stock may pullback for a few weeks, there is then a good chance at moving through $66 to resistance at $70.
For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.