DE - looks temptingThe recent pullback for NYSE:DE looks tempting, but I'm not adding right now. I will monitor price until we get in between the FOMC and earnings in May. I'm eying anything between 347-360 as a strong opportunity to accumulate.
DE is a core holding for me. They have strong dividend growth, low payout ratio, and a strong history of earnings beats. They are a leader in their space, switching costs are high, demand for products in their sector will continue to grow, and replacement demand can only be postponed temporarily. The management team seems to have navigated adversity well, which is critical with geopolitical tensions running hot.
DE has a history of volatility around earnings releases and outlook for industrials is influenced by monetary policy. The industrials surged 26% from the September lows to the March highs. They corrected sharply after the March FOMC and their recovery pulled back again when the ISM manufacturing PMI came in below forecast. DE's price movements coincide with its index, but it typically outperforms the S&P, where the index tends to underperform the S&P.
In this chart we see that movement into the lower portion of the rising channel are an infrequent and rewarding opportunity. Momentum and lack of meaningful company updates suggests that the current downtrend will follow the industrial index and that we may see such an opportunity. I will take any opportunity that I see near the center of the blue circled area and then likely take some profit above the solid green trendline. I've drawn a fib time zone that starts with the April 2022 drawdown. It has aligned with major price reversals and has an upcoming marker in May in between the FOMC and earnings.
