Technicalspeculator.com Trade-of-the-Week: Pearson PLC (PSO)

By Tech_Spec
13-January-2019 3:25:29 AM
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This week’s trade comes from the education publishing sector of NASDAQ.  Key take-a-ways vvare the impressive ROE at 15%, the increasing buying pressure and the breakout after three years of consolidation.

Company profile: 

Pearson plc provides educational products and services to institutions, governments, professional bodies, and individual learners worldwide. The company operates through three segments: North America, Core, and Growth. It offers courseware services, including curriculum materials provided in book form and/or via access to digital content; and assessments, such as test development, processing, and scoring services. The company also operates schools, colleges, and universities; and English language teaching centers, as well as provides online learning services in partnership with universities and other academic institutions. In addition, it sells books; delivers and installs off -the-shelf software; and provides services to academic institutions, such as program development, student acquisition, education technology, and student support services, as well as undertakes contracts to process qualifying tests for individual professions and government departments under multi-year contractual arrangements. The company was founded in 1844 and is headquartered in London, the United Kingdom.

Fundamentals:

Trailing P/E: 12.97

EPS: 1.01, P/S: 1.81, P/B: 1.90

Beta: 0.33, Profit margin: 14.11%, Operating margin: 8.59%

ROA: 2.82%, ROE: 15.21%

Gross profit: 2.45 billion

Current ratio: 1.46

Additional fundamental data: https://finance.yahoo.com/quote/PSO/key-statistics?p=PSO

Technicals:

Recently broke out of a 9-month consolidation

New 52-week high, new 3-year high

Buying momentum (RSI) is positive and rising

Buying volume is neutral, 1st support level is $12.50

Safety stop level is at $12.48

The target is $14.95

Suggested buying approach: Buy PSO at the current price level.  If the stock pulls back, as long as the level is above the safety stop, wait for confirmation of support and then add to the position if desired.  Always use a 3% trailing stop.

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Author: Tech_Spec

Canada’s only Master of Financial Technical Analysis (MFTA). This 4 – 5 year program offered by the International Federation of Technical Analysts (IFTA) in England is regarded as the global standard. • Instructor of Technical Analysis for the Canadian Securities Institute (CSI). My role is teaching market analysis to industry professionals. • Financial Technical Analyst offering 25 years experience in the financial and investment service industry. • Editor and owner of the Technicalspeculator.com, an on-line independent financial market research and newsletter website. • Registered Securities Advisor

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